Ask Alan 231: Which Cash-Secured Put Strike Should I Use?
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Hello Alan,
I’ve been selling weekly cash-secured puts, seeking weekly returns between 0.5% – 1%. I want to avoid having to buy the shares. Today, MRVL is priced at $90.21, and the $92.00 strike yields $5.40, but is at risk of exercise. The $79.00 strike yields only $0.74 but is less likely to be exercised. I also noticed that the implied volatility of MRVL is pretty high (84.4%). Can you help me with the math as how to choose between these two?
Thanks,
David
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