Selling cash-secured puts is a common, relatively conservative options-income generation strategy, but aligning strike selection and timing with technical indicators can significantly improve risk-adjusted returns. One variant I propose to simplify this process involves selling puts with approximately 60 days to expiration when the underlying stock is trading near its exponential moving average (EMA). This approach blends technical discipline, probabilistic pricing and time decay into a cohesive framework. The exponential moving average smooths price trends while weighting recent data more heavily than older prices. Traders use the 50-day EMA as a “mean reversion” guidepost — an area where prices often consolidate before continuing an established trend. When an underlying stock pulls back toward its EMA within an uptrend, option premiums tend to be richer due to increased implied volatility, yet the probability of a significant breakdown remains modest. Selling a put under those conditions, with roughly 60 days to expiration, positions the seller to capture elevated option premium while capturing the tendency for prices to revert toward the mean. Using options with approximately 60 days until expiration seeks to strike a balance between time decay and premium capture while also aligning with the moving average we’re using in this case. Short-dated monitoring Short-dated options (under 30 days) lose value rapidly, but they require constant monitoring and rolling, which increases transaction costs. Longer-dated options (90-180 days) decay slowly and have more “Vega” (sensitivity to changes in implied volatility). Vega exposure, whether long or short, isn’t a bad thing per se, but it’s a broader topic, beyond the scope of this article. At around two months to expiration, a put’s theta (time decay) is sufficient to provide meaningful daily income, while gamma (sensitivity to price changes) is low enough to prevent excessive risk from sharp short-term moves. The result is a moderate-duration position that benefits from both the passing of time and stability in the underlying price. The practical implementation is straightforward. Identify fundamentally sound equities or ETFs with steady uptrends and plot their 50-day EMA. When the “standstill yield” is attractive, sell an out-of-the-money put at a strike near the EMA. The chosen strike serves as both a technical and valuation anchor: If assigned, the investor acquires the stock at a level consistent with recent support and mean reversion expectations. The collected premium cushions downside risk and enhances the effective yield on capital at risk. This method aligns naturally with investors who seek equity exposure but prefer disciplined entry points. Selling a put is economically equivalent to setting a limit buy order at the strike price while being paid to wait. (In this case, one would need to pay the prevailing price of the put if one seeks to cancel it prior to expiration.) Should the stock rise, the option expires worthless, and the investor keeps the premium. Should it decline modestly and assignment occur, the investor acquires shares at a discount relative to pre-pullback levels. Either outcome can be favorable when applied systematically to quality names. Possible risks Which isn’t to say the strategy is without risk. Sudden macroeconomic shocks or trend reversals can push prices well below the EMA, leading to mark-to-market losses or assignments on declining stocks. Position sizing, diversification and the willingness to hold or roll positions are crucial risk controls. Nonetheless, over multiple cycles, selling 60-day puts at or below the EMA can serve as a quantitative “buy-the-dip” strategy — transforming volatility into income and replacing impulsive timing with structured probability management. As an example, consider Rocket Lab Corp (RKLB) . One could consider selling the December 55 puts, a strike just above the 50-day exponential moving average of $54.60. As of Friday’s late-afternoon mid-market prices, those puts were trading at ~$4.65, or 7.2% of the current stock price. In the worst case, an investor would purchase the underlying shares at $50.35, ~22% below the current stock price, the level at which it traded before its most recent breakout in late September. DISCLOSURES: None. All opinions expressed by the CNBC Pro contributors are solely their opinions and do not reflect the opinions of CNBC, NBC UNIVERSAL, their parent company or affiliates, and may have been previously disseminated by them on television, radio, internet or another medium. THE ABOVE CONTENT IS SUBJECT TO OUR TERMS AND CONDITIONS AND PRIVACY POLICY . THIS CONTENT IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSITUTE FINANCIAL, INVESTMENT, TAX OR LEGAL ADVICE OR A RECOMMENDATION TO BUY ANY SECURITY OR OTHER FINANCIAL ASSET. THE CONTENT IS GENERAL IN NATURE AND DOES NOT REFLECT ANY INDIVIDUAL’S UNIQUE PERSONAL CIRCUMSTANCES. THE ABOVE CONTENT MIGHT NOT BE SUITABLE FOR YOUR PARTICULAR CIRCUMSTANCES. BEFORE MAKING ANY FINANCIAL DECISIONS, YOU SHOULD STRONGLY CONSIDER SEEKING ADVICE FROM YOUR OWN FINANCIAL OR INVESTMENT ADVISOR. Click here for the full disclaimer.
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