To The Moon

I sold the IWM PUT 2025-08-08 222.0 for a $2.35 premium while IWM was trading at $220.40. At first glance, it may seem risky to sell a put that’s already in-the-money (ITM), but there’s a calculated reason behind this move. This article covers the strategy, risk, reward, and my exit plan, including how I’ve prepared to manage capital effectively for potential assignment.

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🧠 Strategy: Why Sell an ITM Put?

Selling an in-the-money put option means I’m offering someone the right to sell me shares at a price higher than the current market value. In this case, I agreed to potentially buy IWM at $222, even though it was trading lower at $220.40. For taking on this risk, I earned a higher premium of $2.35 – equivalent to $235 per contract.

This strategy makes sense when:

• I’m confident IWM won’t fall much further or will recover quickly.

• I’m comfortable owning the stock at a net cost below the strike.

• I want to generate strong income in the short term.

ITM puts offer more premium because they carry intrinsic value. The tradeoff is higher assignment probability, which I accept if the net entry price fits my investment thesis.

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🔄 Exit Plan: Buy Back at $0.50, Then Wait

To manage this trade efficiently, I’ve already queued to buy back the option at $0.50 when the market opens. If IWM bounces or volatility drops, that price target may be hit quickly — allowing me to lock in a significant portion of the premium profit.

Rather than immediately opening a new position, I plan to wait for a short-term pullback before selling the next in-the-money put. This way, I can sell into weakness and capture even higher premiums with more downside buffer, reducing the chance of assignment.

This tactical timing keeps me nimble and prevents overtrading during short squeezes or market strength.

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🛡️ Risk: Assignment and Price Decline

With ITM puts, assignment is very likely. If IWM remains below $222 by expiry, I’ll be assigned 100 shares per contract. If it drops further, I could be holding shares above market value.

However, the premium collected reduces my cost basis to $219.65 ($222 - $2.35). As long as IWM doesn’t collapse, this net price is acceptable given my market view.

Still, I monitor carefully — because early assignment is always possible, especially when the option is deep ITM and nearing expiration.

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💼 Keeping It Cash Secured

This trade is 100% cash secured. I have the full $22,200 ready in the account to cover assignment, with no margin used. That’s critical. Margin can amplify gains but also destroy portfolios in a downturn.

By staying cash secured:

• I eliminate the risk of forced liquidation.

• I avoid interest charges or margin calls.

• I trade from a position of strength and flexibility.

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🏆 Reward: Premium or Shares at a Discount

There are two favorable outcomes:

1. If IWM rises above 222 by expiration – I walk away with the full $235 premium.

2. If IWM stays below – I get assigned shares, but at an effective entry of $219.65, cheaper than where IWM was trading when I entered the trade.

Either way, the trade works as income or long-term entry — depending on how the market plays out.

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Final Thoughts

This is a clear example of disciplined options trading — using in-the-money puts to generate cash flow, while managing risk with proper capital and a planned exit. The key is to prepare, react with flexibility, and never force the next trade.

By queueing to close the position early at $0.50 and waiting for a better entry point before selling another ITM put, I’m letting the market come to me — not chasing. That’s how premium sellers stay in control.

$iShares Russell 2000 ETF(IWM)$  @Wrtd @MillionaireTiger @TigerEvents @TigerStars @TigerEvents