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.
We have seen before the merits of selling the put in, say, the S&P 500 versus buying 100 shares, but today’sstudy digs a little deeper:
- Sold ATM put and bought 100 shares of stock
- (45 days)
- Compared how often short put outperformed long stock
- Compared of P/L as risk metric
- S&P 500 ETF (SPY)
- 2005 to present
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.