Why Selling Put Options?

Selling (also called writing) a put option allows an investor to potentially own the underlying security

at a future date and at a much more favorable price. ... An investor who sells put options in securities that they want to own anyway will increase their chances of being profitable.

Why are put options valuable?

Investors may buy put options when they are concerned that the stock market will fall. That's because a put—which grants the right to sell an underlying asset at a fixed price through a predetermined time frame—will typically increase in value when the price of its underlying asset goes down.

Is selling put options Safe?

However, as many put-selling tutorials will tell you, selling puts is “risky” because the downside risk outweighs the upside potential. The maximum rate of return you can get during this 3.5 months is a 5% return from put premiums. Your returns are therefore capped at 5%, or 18% annualized if you keep doing it.