Market Movements

^{*Weekly Return is calculated as market open of the previous Wednesday, to market close this Tuesday (yesterday); Current Level is Tuesday’s (yesterday’s) close.}

Weekly Rollout

The stock market played a game of tug-of-war today, with the Nasdaq taking a 1% dive as tech darlings Palantir and AMD tripped over their own feet, while the Dow barely clung to a positive close. Investors are holding their breath for the Federal Reserve’s Jackson Hole Symposium, where Fed Chair Jerome Powell might drop hints about rate cuts—or throw a curveball on inflation. Consumer sentiment took a hit, sliding to 58.6 (from 61.7) as tariff fears and rising inflation expectations (nearing 5%) soured the mood, setting the stage for jittery markets.

Across the pond, EU imports are feeling the squeeze from U.S. tariffs, with oil and other goods hitting a rough patch as trade tensions simmer. Goldman Sachs is waving a caution flag, urging investors to hedge with options to shield against a potential market stumble. With the S&P 500 looking pricey and policy uncertainty lurking, traders will want to keep their eyes peeled and their portfolios padded for whatever surprises come our way.

“Good-To-Know’s”

Take MARA, currently trading around $15.18. If you believe the stock is attractive at $14, you could sell the Sept. 19th $14 put (~30 delta) and collect about $0.61 in premium.

If MARA closes below $14 at expiration, you’d be assigned and thus required to buy 100 shares at $14 per share. But, your effective cost basis would be $13.39 ($14 strike – $0.61 premium) due to the premium offset of $0.61 per share. Not bad at all.

If the stock stays above $14 and the option expires worthless, you simply keep the $61 ($0.61×100 shares). This is a 4.55% return in 31 days, or an annualized yield just north of 65%. This is what makes CSPs so powerful.

Quote(s) I Like

Thought Throttle

Not too long ago, I heard a trader say that a cash-secured put is the same as a limit order. There are some similarities, but also some very important differences that need to be discussed.

If you’ve ever wondered, “Why use a limit order when I could sell a cash-secured put?” or “Why sell a cash-secured put when I could just place a limit order?” then stay tuned.

They’re fair questions. On the surface, both achieve broadly the same thing. You set a target price and wait. But if we look under the hood, we’ll find some key differences—differences we absolutely must understand.

Limit Order (Buy)

A limit order is straightforward. You tell your broker (or app) that you will buy XYZ at a given price or better. If the market trades down to that price, you’re in (ViceVersa for Limit Sell Orders).

This is a simple way to enter a trade at your chosen level, with no options approval required. But you do have to deal with the fact that your money is sitting idly by, waiting for execution of the limit order. You’re essentially standing in line, waiting for Mr. Market to meet you at your price.

Cash-Secured Put (CSP)

A cash-secured put, on the other hand, allows you to get paid while waiting to purchase shares. When you sell a put, you’re agreeing to buy 100 shares of the stock at that price. If the stock dips below your strike by expiration, assignment is very likely. To compensate you for your potential obligation to buy the stock, you collect a premium upfront. Woo-hoo.

But, when you sell a put, you’re locked into a contract. If the stock falls hard, you’ll still be buying at $50 even if it trades much lower. And remember—you’re not the decision-maker. The buyer of the option decides when to exercise, and you’re there to fulfill.

Consider this example for comparison…

Assume XYZ trades at $50. You can either (a) place a limit order to buy at $45, or (b) sell a cash-secured put with a $45 strike expiring at the end of the month, receiving $1.50 in premium. Let’s compare what would happen in three different outcomes:

Outcome One: If XYZ dips to $44 for just a moment mid-month, then rockets back up to $70 before the CSP expires.

• The limit order gets filled at $45 during the quick dip. By the end of the month, you’re holding shares you purchased at $45 while the stock trades at $70 (unrealized gain of $25 per share).

• The cash-secured put, on the other hand, never gets assigned because the stock closes well above $45 at the end of the month. You just keep the $150 premium you collected (profit of $1.50 per share).

• In this case, the limit order outperformed by capturing the moonshot. The CSP trader got paid, but missed the rally.

Outcome Two: XYZ drifts lower, ending at $44 per share by month-end.

• The limit order gets filled at $45. By expiration, you’re sitting on a $1 per share unrealized loss.

• The cash-secured put is assigned at expiration at the end of the month. You effectively own the stock at $43.50. You would be sitting on a $0.50 per share unrealized gain versus your effective entry ($43.50 v. $44).

• Here, the CSP provided cushion and even turned a small win where the limit order lost money.

Outcome Three: The stock remains at $50 per share throughout expiration—a flat market.

• The limit order is never filled, because the stock never dipped to $45. You’ve essentially waited for an entry that didn’t come.

• The cash-secured put also isn’t assigned, but you still gain $1.50 per share from the premium collected.

Summarized below:

In Summary…

Cash-secured puts are typically better if the stock drifts lower or stays flat—you get paid while lowering your cost basis. Limit orders, however, work best if the stock moves in a herky-jerky fashion. If it dips then rips, you could miss out using a CSP instead of a limit order.

Both methods, limit orders and cash-secured puts, target a lower entry, but they play out differently. A limit order is passive—you may never get filled, but if the stock dips and then rips higher, you capture the full upside.

A CSP is active—you collect premium while waiting, lowering your cost basis and earning in flat or slow markets. The trade-off: you risk missing big upside moves and remain obligated to buy if assigned.

Important Things to Note

• CSPs lock up significant capital until expiration or closing, while limit buy orders tie up no funds until execution.

• CSPs risk early assignment, requiring readiness to buy shares anytime, whereas limit orders carry no obligation and can be canceled freely.

• CSPs cushion entry with premiums but don’t eliminate losses—if the stock tanks, you’re buying above market; limit orders avoid this but may not fill.

• CSPs ensure a defined outcome (premium or shares), but limit orders may partially fill or miss entirely, especially in volatile markets.

Trade Mechanics

Assume we’re eyeing HIMS & Hers Health (HIMS), which is currently at $42.40. Whether it’s their telehealth hustle, innovative wellness products, the nearing support level of $40, or just a hunch, we’re convinced HIMS is a steal at or below $40 per share.

Selling a CSP lets us lock in that value while pocketing a premium. Our gut tells us to sell the Sept 19th 2025 $40 strike put (~35 delta), crediting us $2.20 in premium. We’re comfortable with the higher delta of 35 to boost our chances of owning the shares.

This $40 strike put delivers a 5.82% return in 31 days ($220 premium ÷ $3,780 cash required), or a hefty 94.7% annualized if HIMS stays above $40 and the option expires worthless. No complaints here.

If assigned, our effective cost basis is $37.80 ($40 - $2.20), a 10.9% discount from the current price of $42.40. Also an outcome that we would be more than happy with.

2.0 Version

For traders dead-set on grabbing shares, an ATM $42 strike put (~45 delta, $3.17 premium) offers an 8.16% return (~150% annualized) if it expires worthless, with a $38.83 effective cost basis if assigned.

An even higher strike put could be sold—an ITM $45 strike put (60 delta, $5.00 premium) maximizes assignment odds with a 12.5% return (300% annualized) if it expires worthless (unlikely), and a $40 effective cost basis if assigned. The further in the money we go, the higher the likelihood of assignment

Here’s a table to break it down…

The $40 strike hits our sweet spot—a juicy premium with a solid discount if assigned. The ATM and ITM puts crank up the assignment odds and premiums, but require more cash, offer smaller discounts, and leave us with a higher effective cost basis. This could be better suited for traders eager to own HIMS outright.

Keep in Mind…

Premiums can spike with volatility, but earnings or market moves can also widen bid-ask spreads or trigger early assignment. ITM puts increase assignment likelihood but demand more capital, as seen with the $45 strike.

Less liquid tickers may have wider spreads, and these returns assume no slippage. The bid-ask spreads also widen the further we stray from ATM ($42.40)—this is because the volume and open interest decreases substantially (most people trade close-ish to ATM).

As always, size positions carefully, talk to a financial pro for tailored financial guidance, and if you can’t clearly explain the parameters of your trade to your mom/grandma, you may not understand it well enough. Happy Trading.

This is for educational purposes only—not a trade recommendation. Returns are not guaranteed and are provided as examples only. Always do your own due diligence and consult a financial advisor before making investment decisions.

Throttle Q&A

Does Assignment on a CSP Only Happen at Expiration?

No. At least not when using American Options (if you are reading this, you are likely using American Options). Assignment can occur anytime before expiration, though most happen at or near expiration. You must always be ready to own the stock once you sell the put. This is why it is imperative that you sell CSPs on stocks that are fundamentally sound.

Can I Exit a CSP Early?

Yes—you can always close a cash-secured put before expiration by buying back the same contract you sold. Traders often do this if the stock stays well above the strike and the option’s value has dropped, letting them lock in most of the premium early and free up capital for the next trade. This flexibility makes CSPs more dynamic than limit orders, which either fill at your price or don’t. With a limit order, you can cancel anytime, but you don’t capture income along the way.

Got any questions or comments? Feel free to reply to this email—we’d love to hear from you!

If you found this helpful, feel free to share or forward this email to anyone who might be interested! We appreciate your support.

Disclaimer

The information provided in this newsletter is sourced from reliable channels; however, we cannot guarantee its accuracy. The opinions expressed in this newsletter are solely those of the editorial team, contributors, or third-party sources and may change without prior notice. These views do not necessarily reflect those of the firm as a whole. The content may become outdated, and there is no obligation to update it.

This newsletter is for informational purposes only and does not constitute personal investment advice. It is not intended to address your specific financial situation and should not be construed as legal, financial, tax, or accounting advice, or as a recommendation to buy, sell, or hold any securities. No recommendation is made regarding the suitability of any investment for a particular individual or group. Past performance is not indicative of future results.

We strongly advise you to consult with a financial advisor before making any investment decisions, including determining whether any proposed investment aligns with your personal financial needs.