Should one use “naked put selling” as a strategy to generate consistent income?
But you also must be prepared for the possibility that you could get assigned and have to buy the shares.
That’s why it’s imperative to only sell put options on stocks that would make a great fit for your portfolio - in case you do get assigned. This is my #1 Rule.
If you'd like to reduce the chance of assignment and still generate consistent income, the best way to do this is to sell put options that are somewhat deep-out-of-the-money.
In our service, we concentrate on selling put options that are usually 20%-30% out-of-the-money, and it has worked great for us.