Selling Puts For Income: How To Get Paid To Buy Stocks You Already Want

Want to get paid for buying stocks you already like?

Most investors discover a wonderful company. They wait patiently for a decline, then buy shares at whatever price the market offers.

There’s nothing wrong with that. But there’s a smarter way…

Selling puts.

The reason it’s so easy for beginners to earn options income using this method is that it completely reverses the transaction. You no longer pay money to own stock; the market pays you to wait.

And adoption is continuing to rise. US options traders exchanged a record 15.2 billion contracts in 2025.

Inside this guide:

What Does Selling A Put Actually Mean?
Why Selling Puts Works So Well For Beginners
The 4 Step Put Selling Method
The Risks Nobody Talks About

What Does Selling A Put Actually Mean?

A put option is an option contract. The holder has the right to sell 100 shares of stock at a predetermined price before the expiration date.

When you sell a put you are on the opposite side of that transaction. You’ve obligated yourself to purchase those 100 shares at the strike price.

The tradeoff is that you are paid first. The money you receive is called the premium.

Pretty cool, right?

Here’s a quick example:

Suppose there is a stock you like that is trading for $52. You would feel comfortable owning it if it was $50. You sell one put with a $50 strike that is good for 30 days. You get to keep $1.50/share. That’s $150 in your account right now.

Now only two things can happen:

The stock stays above $50: The put expires worthless. You keep the $150.
The stock falls below $50: Let’s say you purchase 100 shares at $50. However, since you retained the $150 from the option buyer, your actual cost per share was only $48.50.

Either way, you win. You either get paid to wait or you get to buy a stock you wanted cheaper.

If you’re new to trading for income by selling options, the broker side can seem overwhelming. Follow this easy guide on how to sell a put, which walks you through each click from strike price to your first paid trade.

Why Selling Puts Works So Well For Beginners

Here’s the thing most new traders miss…

Option buying is very similar to buying a lottery ticket. You hope the stock moves enough in your favour before expiration. Miss any of those and you lose your money.

Selling puts is the opposite. You have time on your side. As time passes, the option gradually loses value – and that lost value is your profit.

When you purchase options, you are speculating on what may occur. When you sell puts you are being compensated for what is likely to not occur.

Long-term results are no different. Cboe publishes a PutWrite Index which has sold S&P 500 puts every month. During the 10 years leading up to 2015, it experienced a max drawdown of 32.7% while the S&P 500 dropped 50.9%.

That’s a much smoother ride.

On top of that, put selling gives beginners three big wins:

You are paid upfront: The money shows up in your account when the trade executes.
You choose your buy price: Don’t chase stocks up. You choose what you want to pay.
You stay patient: You learn to wait for good prices rather than buying something just because it’s hyped.

The 4 Step Put Selling Method

Want to give it a shot? Here’s the easy 4 process used to ensure safety and repeatability.

Step #1 – Pick Stocks You Actually Want To Own

This is the most important rule.

Sell puts only on companies you would be happy to own for the next decade. Think world-class brands with proven profits and stable businesses. Never sell a put just because of the premium. When the premium gets REALLY big, that means the market is expecting a BIG move… And it’s not always going to be to YOU.

Step #2 – Set Aside The Cash

This is called a cash-secured put, and it’s the beginner-friendly way to do it.

Multiply the strike price by 100. $50 strike? You should have $5,000 cash in your account. That way if the shares are put to you, you already have the funds. No margin loan. No ugly surprises.

Step #3 – Choose Your Strike And Expiry

Pick a strike price below where the stock trades today. Ask yourself one question:

“Would you be thrilled to buy at this price?”

If yes, then congrats, you have your strike. As for expirations, 30-45 days out is ideal for most beginners. You’ll get a nice premium without locking up your money for ages.

Step #4 – Collect, Repeat (Or Own The Stock)

If the put expires worthless, sell another one. Rinse and repeat.

Congratulations if you receive an assignment – that means you now own a stock you wanted at a lower price. Many traders will sell covered calls on those new shares for even more income. This strategy pair is called “the wheel” and is often the next progression.

The Risks Nobody Talks About

Put selling is not a free lunch. If someone tells you it is, they are leaving out where.

Here’s the big one:

If it drops $22 from $52 to $30, you’re still buying it at $50. The $150 premium helps cushion the drop but won’t prevent a large loss. That’s why Step #1 is so important. A quality company bounces back. Junk may not.

Your upside is limited too. If the stock surges to $70, you only keep the $150 premium. You leave the BIG profit on the table.

A few other mistakes to avoid:

Selling puts right before an earnings report (prices can swing wildly)
Using all of your cash on one trade
Chasing high premiums on risky stocks

Trade small until you gain experience. Diversify among several companies. Know how much you could lose if all your puts were exercised simultaneously.

The Bottom Line On Put Selling

Selling puts is probably the simplest way for a new options trader to begin generating options income. Collect income by waiting for prices YOU already like…and if it drops, you buy it cheap! Let’s quickly review:

Choose stocks you’d love to own
Keep enough cash to cover assignment
Sell a strike below today’s price, 30-45 days out
Collect the premium
Rinse and repeat

Begin with baby puts. Be patient and pretend every put is a put you promised to buy. Do that and the market will pay you to do what you were gonna do anyway.

This post may contain affiliate links.

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Kevin is an attorney and the blogger behind Financial Panther, a blog about personal finance, travel hacking, and side hustling using the gig economy. He paid off $87,000 worth of student loans in just 2.5 years by choosing not to live like a big shot lawyer.

Kevin is passionate about earning money using the gig economy and you can see all the ways he makes extra income every month in his side hustle reports.

Kevin is also big on using the latest fintech apps to improve his finances. Some of Kevin's favorite fintech apps include:

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Empower. One of best free apps you can use to monitor your portfolio and track your net worth. This is one of the apps I use to track my financial accounts.

Feel free to send Kevin a message here.