One Small Tweak That Made My Naked Put Strategy Better

I didn’t reinvent my strategy.

I didn’t switch tickers or overhaul my approach.

I made one small adjustment — and it made my naked put trading better in every way.

I’ve always liked selling puts on SPY. For years, I stuck to the textbook approach: sell far out-of-the-money puts, usually around the 5-delta mark. That gave me a 95% implied probability of profit and a decent chance of staying out of the way.

I’d collect about $1.30 in premium and close the trade when I hit 80% of max profit — typically buying it back for $0.30, locking in about a $1.00 gain per contract.

Solid. Reliable. But slow.

To make a $200–$250 profit, I had to sell two contracts, which meant taking on nearly $100,000 in notional risk. And on average, I’d be in the trade for 30 to 40 days.

This is what I did going back to 2021:

Recently, though, I made a small tweak:

I moved the strike closer to the money — from 5-delta up to 15-delta.

That drops the implied probability of profit to around 80%, but the tradeoff is worth it: I now collect around $5.00 in premium, and I set a tighter exit — closing at 50% of max profit.

That’s $2.50 profit per contract.

Now I only need one contract to hit my profit target. Notional risk drops to around $50,000, and I’m usually out of the trade in under two weeks.

Same product. Same setup. Still selling naked puts — just with a smarter risk-to-reward structure.

This one small tweak has allowed me to:

• Risk less capital

• Exit trades faster

• Increase profit per trade

• Trade fewer contracts

Here’s what that’s looked like in practice:

In June alone, I closed 16 trades, all winners, for an average gain of $216 per trade. Average time in trade? 14 days.

Compare that to my older stats:

An average gain of $110 (per contract), and 33 days to get there.

Of course, there are tradeoffs.

A higher-delta put gets tested more often. It moves faster. You need to manage more actively.

But I’m not trying to be safer. I’m trying to be smarter — and more efficient with my capital.

And that’s the key.

There’s no perfect way to sell premium. But if you’re stuck holding multiple low-delta puts for weeks just to grind out small gains, it might be time to see what a slightly higher delta strike can do for your capital efficiency and time in the trade.

-Igor
incomenavigator.com