In yesterday’s issue of Trade of the Day, I wrote about the secrets to selling puts without getting burned.

Today I’m going to lay out my timing formula for selling puts.

By the end of this article, you’ll know exactly when to get in a put trade.

But in case you aren’t familiar with put selling, let me give you a quick rundown…

In short, put selling involves charging someone upfront for the right to make a deal with you later on… but you’re betting on them NOT wanting to make the deal.

When you sell a put option, you’re expecting that the underlying stock’s price will either rise or remain stable.

If the stock price doesn’t drop below the strike price by the put’s expiration date, the put expires worthless for the buyer and you keep the money you made by selling it.

However, if the stock price falls significantly below the strike price, the buyer could exercise the option. That would obligate you to buy the stock at the strike price, which could result in a loss.

Due to that risk, it’s important to know when to engage in a put sell.

The Best Time to Sell Puts

Sometimes I look to sell a put after a news event that has been misunderstood by “the Street.”

For example, when a stock reports negative news, it usually results in a sell-off for the shares. When that happens, selling puts becomes even more attractive because I can choose an even lower strike price.

However, these sell-offs are rare, and the truth is…

The best time to sell puts is often before earnings are reported.

You see, put premiums – and options premiums in general – tend to rise right before earnings.

This is because an earnings release can make the stock’s price more volatile, and more volatility leads to higher premiums.

Therefore, I look for stocks that have higher-than-normal implied volatility, and I zero in on those for put selling.

YOUR ACTION PLAN

Put selling is one of my favorite strategies, and this formula for put selling allows you to capitalize on volatility and get the best premiums. If you’d like to follow along as I make put trades, I invite you to join me in The War Room today. We have a 90% success rate selling puts in The War Room, and right now we’re guaranteeing you’ll receive 252 winning trades in your first 12 months of membership.

Isn’t it time you joined? Click here to unlock The War Room.

FUN FACT FRIDAY

They Call Themselves “Sons of Liberty.” Back in the 1700s, a secret society known as the Sons of Liberty used to congregate at Fraunces Tavern, which is located in the heart of New York City’s Financial District and is the oldest restaurant in the city. On December 4, 1783 – just nine days after the last British troops left American soil – General George Washington gathered a group of his officers there to thank them for their service before they returned home.