I am sure you will get a few opinions on this subject and here is mine....
A true premium player will chase the better premiums that are easy to find on a screen. It is so tempting vs more conservative stocks. The underlying security is not so important to the true premium player. It works great right up until it blows up in your face when the market swings at the wrong time. It's just gambling because the put sale is basically naked. If you don't want to be assigned you can attempt to repurchase the put and roll it forward to a future date. You can use other strategies such as spreads to limit your risk. I am not interested in the time and stress required to make that work.
My personal rules are NEVER sell a put unless I truly desire to own the stock, and probably for the longterm. If the company story changes over the next month I might roll it forward, but that is never the plan going in. I have made about 8 put sale trades the past 10 days as I try to establish a DG portfolio at a discount. Mostly it is going very well. Here is an example of a trade I placed that isn't going so perfectly....
I desired to own MMM and the current price is 212.50. I'm a little nervous to enter since SEP-OCT can be tough, especially after the markets recent run. Trade wars likely etc. 100 shares is a 21K+ purchase and that's a big move for me. So I sell an OCT 19th put at the 210 strike price. $410 premium and I am pretty comfortable. If assigned my basis will be about $206. $6.50 below the price I was considering paying to go long now. Put sale looked good until yesterday when MMM announced some financing plan the market apparently didn't like. Stock dropped to about $208 with almost a month to go on the option contract. I am still OK but if the price drops much lower I will have to assess whether I want to be assigned or roll it forward. If the price stays anywhere near the strike rolling forward is no big deal. If I had went long at 212.50 I'd already be down $450. I wouldn't stress it if it was a $50 stock but we are talking big money with a $200+ stock. If a stock drops 5-10% you may maneuver out of it by rolling forward and profiting from time value erosion. If the stock goes into freefall you are going to eat it at some point. I'll let you know how this MMM play ends. Most of the other puts I sold are going to expire worthless and I sell another put because I do desire to go long on these stocks. I may have to sell some of these puts three times to go long. Barring a crash a few stocks will run away and I will not own them anytime soon. There are plenty of opportunities so I won't chase anything very far if it runs. I am getting windy again
A true premium player will chase the better premiums that are easy to find on a screen. It is so tempting vs more conservative stocks. The underlying security is not so important to the true premium player. It works great right up until it blows up in your face when the market swings at the wrong time. It's just gambling because the put sale is basically naked. If you don't want to be assigned you can attempt to repurchase the put and roll it forward to a future date. You can use other strategies such as spreads to limit your risk. I am not interested in the time and stress required to make that work.
My personal rules are NEVER sell a put unless I truly desire to own the stock, and probably for the longterm. If the company story changes over the next month I might roll it forward, but that is never the plan going in. I have made about 8 put sale trades the past 10 days as I try to establish a DG portfolio at a discount. Mostly it is going very well. Here is an example of a trade I placed that isn't going so perfectly....
I desired to own MMM and the current price is 212.50. I'm a little nervous to enter since SEP-OCT can be tough, especially after the markets recent run. Trade wars likely etc. 100 shares is a 21K+ purchase and that's a big move for me. So I sell an OCT 19th put at the 210 strike price. $410 premium and I am pretty comfortable. If assigned my basis will be about $206. $6.50 below the price I was considering paying to go long now. Put sale looked good until yesterday when MMM announced some financing plan the market apparently didn't like. Stock dropped to about $208 with almost a month to go on the option contract. I am still OK but if the price drops much lower I will have to assess whether I want to be assigned or roll it forward. If the price stays anywhere near the strike rolling forward is no big deal. If I had went long at 212.50 I'd already be down $450. I wouldn't stress it if it was a $50 stock but we are talking big money with a $200+ stock. If a stock drops 5-10% you may maneuver out of it by rolling forward and profiting from time value erosion. If the stock goes into freefall you are going to eat it at some point. I'll let you know how this MMM play ends. Most of the other puts I sold are going to expire worthless and I sell another put because I do desire to go long on these stocks. I may have to sell some of these puts three times to go long. Barring a crash a few stocks will run away and I will not own them anytime soon. There are plenty of opportunities so I won't chase anything very far if it runs. I am getting windy again