How I Use Options and Technical Analysis to Generate ~$2K Monthly (Part 4/5)

By Harsh Shah · Updated

Disclaimer: This content is for educational purposes only and should not be considered financial advice.

Before reading further, make sure you’re read the first three parts.

Part 1: Understanding Options
Part 2: Understanding Puts Introduction
Part 3: Cash Secured Puts vs Margin

When people talk about selling put options, they usually focus on premiums, Greeks, or how much money they can make each month.

The real edge is not the option — it’s the stock and the price you choose to commit to.

Everything else is just math layered on top. Lets break it down…

Only Sell Puts on Stocks You Don’t Mind Owning

When you sell a put, you are making a promise:

“If this stock drops to this price, I’m willing to buy it.”

That means every put you sell is really just a paid limit order.

So Rule 1 is simple:
Only sell put options on stocks you genuinely wouldn’t mind owning.

If you wouldn’t feel comfortable holding the stock through a drawdown, you should not be selling puts on it — no matter how attractive the premium looks.

This single rule eliminates most emotional mistakes.

Why Price Matters More Than Direction

Most traders try to predict where a stock will go.
I don’t.

I focus on where it should not go.

This is why technical analysis is central to my approach. Support levels, Trendlines, and prior bases show where real buyers previously stepped in.

When I sell a put, I place my strike:

I’m not betting on upside.
I’m betting on structure holding.

Why I Use 30–45 Day Put Options

Time is your silent partner.

I sell puts that expire in 30 to 45 days because this is where time decay works hardest in your favor.

Short-term options are too reactive.
Long-term options tie up capital for too long.

Monthly options give:

Theta decay is the natural loss of an option’s value over time — every day that passes makes the option worth a little less, benefiting the seller.

This is where selling options becomes a repeatable process.

How I Choose My Strike Prices

Let’s say Tesla is trading at $450
And technical analysis shows strong support near $400

Most traders sell the $400 put.

I don’t.

I go much more conservative — something like $350.

That gives me:

Yes, the premium is smaller — and that’s intentional.

My goal is not to maximize income.
My goal is to minimize assignment risk.

Where Margin Becomes a Force Multiplier

Since I sell far out-of-the-money puts, each contract pays less.
But margin allows me to scale.

I would rather sell:

Similar income.
Much lower probability of assignment.

Margin lets me layer income on top of my long-term portfolio without selling a single share.

Diversification Is Non-Negotiable

I don’t sell puts on just one stock.

I spread my trades across a range of quality stocks so no single name can hurt my account.

Diversification:

This turns put selling into a portfolio strategy — not a single-stock gamble.

What If the Trade Goes Against Me?

This is where risk management matters.

If a stock starts dropping toward my strike, I have options:

I don’t wait and hope.

I also follow two strict rules:

80% rule
If I’ve captured 80% of the premium, I close the trade and free up capital.

100% loss rule
If a position is down more than 100% of the premium collected, I close or adjust. I never let a small loss become a large one.

These rules keep my risk controlled and my capital alive.
Note: This may vary and requires case-by-case monitoring.

I Journal Every Trade

Every month, I document:

This turns every win and every loss into data — and that’s how skill compounds over time.

I also track the maximum dollar amount I would need if assigned, which helps prevent overcommitting just to chase premium.

My Goal Is Simple

I am not trying to get assigned.
Assignment is the failure case.

My goal is:

If assignment happens, I have a plan — but everything is structured so it happens rarely.

This is not gambling.
This is probability engineering.

Final Thought

Selling puts is not about predicting the future.

It’s about choosing:

Do that consistently, and the income becomes boring.
And boring is exactly what you want in the markets.

In the final part, I’ll cover the key risks of this strategy, how to manage them, and my overall perspective.