How to Incorporate High Implied Volatility Stocks into Conservative Cash-Secured Put Portfolios
In a previous publication, a high implied volatility (IV) ETF, URA was analyzed as how to use it in a defensive manner while still generating significant covered call writing returns. In this article, a real-life cash-secured put trade with Solaris Energy Infrastructure Inc. (NYSE: SEI) will be investigated. Why SEI? After the BCI Weekly Stock Screen & Watch List was published, I looked for the highest IV stock that had adequate option liquidity and no earnings report (ER) concerns. SEI stood out with an enormous IV of 83.7%. Can we generate decent returns and still craft trades with a low risk of exercise?
SEI on our Premium Member Stock Report
- Note the IV of 83.7% (circled with red arrow)
Real-life trade with SEI on 9/22/2025
- SEI trading at $37.63
- The 10/17/2025 $25.00 put has a bid price of $0.21
- The $25.00 put shows a Delta of -0.0454 or a 4.5% risk of being subject to exercise at expiration
- SEI next ER date is 11/6/2025
The BCI Trade Management Calculator (TMC)
- Red circle: 26-day trade, if taken through contract expiration
- Yellow cell: Breakeven (BE) price is $24.79 from current market value of $37.63 (red arrow)
- Brown cells: Initial time value return is 0.85%, 11.89% annualized
- Purple cell: Downside protection to BE is a whopping 34.12%
- According to the Delta, the risk of being subject to exercise (without exit strategy intervention) is approximately 4.5%
Discussion
Even ultra-high IV securities can be used in our option portfolios in a low-risk manner, keeping our capital preservation goal in mind. In this case with SEI, the risk of exercise is only 4.5% with the potential of an 11.89% annualized return … singles and doubles, no grand slam homeruns. It is important to always remember that when we craft our trades defensively, rather than traditionally (strikes closer to current market value) we are trading potential returns for protection. However, the returns can still be significant while still benefitting from the downside protection.
Selling Cash-Secured Puts Basic and Advanced Principles: Online Video Course
This course contains 6- parts:
Section I: Option basics (definitions and foundational information)
Section II: Traditional put-selling (stock & option selection + position management)
Section III: PCP (wheel) strategy (adding covered calls to selling cash-secured puts)
Section IV: Buy a stock at a discount instead of a limit order (buy a stock at our target price or get paid not to buy the stock)
Section V: Ultra-low-risk put/Delta strategy (High probability, low-risk trades)
Section VI: Ultra-low-risk put/implied volatility strategy (High probability, low-risk trades)
Free training resources
Your generous testimonials
Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to publish several of these testimonials in our blog articles. We will never use a last name unless given permission:
I just ordered the TMC Package. The webinar last night was excellent! Really good job. I look forward to using the TMC!
Gary
Market Misbehavior Interview (David Keller)
Upcoming events
1. Las Vegas Money Show- 2 presentations
February 23 – 25, 2026
The Collar Strategy: Covered Call Writing with Protective Puts
Protecting covered call trades from catastrophic share loss
This is the strategy Bernie Madoff pretended to use. He called it the split strike conversion strategy, but it was simply a collar. The covered call sets a ceiling on the trade and the protective put guarantees a floor on the trade
Topics discussed
- What is the collar strategy?
- Uses for the collar
- Entering a collar trade
- Option basics for calls
- Option basics for puts
- Real-life example with NVDA
- What is an option-chain?
- Real-life example using the BCI Trade Management Calculator (TMC)
- Strategy pros & cons
- Educational products & discount coupon
- Q&A
Selling Cash-Secured Puts to Buy a Stock at a Discount or to Enter a Covered Call Trade
2 outcomes & 4 applications
Selling cash-secured puts is a low-risk option-selling strategy which generates weekly or monthly cash-flow. This presentation will detail how to craft the strategy to generate cash flow, buy a stock at a discounted price or to initiate a covered call trade. Topics included in the webinar include:
- Option basics
- The 3-required skills
- 4-practical applications
- Traditional put-selling
- PCP (Put-Call-Put or wheel) Strategy
- Buy a stock at a discount instead of setting a limit order
Real-life examples along with rules, guidelines and calculations are included in this presentation.
Time, date & registration link.
2. Palm Beach Traders Club
March 10, 2026
6:30 PM – 8 Pm ET
Private Investment Club / guests are welcome (free)
Wine-tasting event follows for those interested.
3. Long Island Stock Investors Meetup Group: Part II
Thursday March12, 2026
7:30 PM ET – 9:00 PM ET
Ultra-Low-Risk Approaches to Covered Call Writing & Selling Cash-Secured Puts
Introducing Our Latest Products, Creating New Investment Opportunities
4. Hollywood Florida Money Show
April 10, 2026
11:40 AM – 12:25 PM
The Put-Call-Put (PCP) or Wheel Strategy
Using Both Covered Call Writing and Put-Selling to Generate Monthly Cash Flow
Selling stock options is a proven way to lower our cost-basis and beat the market on a consistent basis. Two such low-risk strategies are covered call writing and selling cash-secured puts. This presentation will detail how to incorporate both strategies into one multi-tiered option-selling strategy where we either generate cash-flow or buy a stock at a discount. I refer to this as the Put-Call-Put (PCP) Strategy, also referred to as the wheel strategy.
The basics and pros and cons of low-risk option-selling strategies will be discussed as well as an analysis of a real-life example and introduction into the BCI Trade Management Calculator (TMC). This seminar is appropriate for those who look to generate modest, but consistent, returns which will enable us to potentially beat the market on a consistent basis while focusing on capital preservation.
More details to follow.
5. Young Investor’s Club at The University of Central Florida
April 16, 2026
Private student investment club.
6. Sarasota Investment Group
Portfolio Overwriting: A Form of Covered Call Writing
Wednesday April 22, 2026
Details to follow.
7. BCI Educational Webinar #10: The Put-Call-Put (PCP) or “Wheel Strategy”
Thursday May 14, 2026, at 8 PM ET
Using both covered call writing & cash-secured puts in a multi-tiered option selling strategy. A 68-day real-life example taken from one of Alan’s portfolios will be analyzed.
BONUS: Barry will share a real-life credit spread trade using our BCI Conservative Credit Spread Management System.
Discount coupons and a live Q&A session will follow the presentation.
8. Orlando Money Show
October 5 – 7, 2026
Details to follow.
Source link
