Market Measures

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Selling Puts: A Thorough Analysis

Market Measures

Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

All of our research is thorough, but today’s segment on selling naked put options goes above and beyond to bring you all the historical metrics you need to understand the strategy. The tastytrade Research Team kicks off the show by bringing viewers a very classic comparison between buying stock and selling puts.

We have seen before the merits of selling the put in, say, the S&P 500 versus buying 100 shares, but today’s Market Measures study digs a little deeper:

The Results

We found that selling puts has had the edge over long stock by outperforming the long stock strategy 55% of the time, and 100% of the time in down or unchanged markets. Finally, the risk in short puts was found to be a third less than that of buying shares.

Check out the full detailed explanation of this analysis on short puts in the segment above.

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