Why I'm Selling 2-Year Puts (And Why Most Traders Won't)

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The analysis focuses on selling LEAP puts as an extension of the wheel strategy, applied to stocks that the trader is willing to hold long-term. Key selection criteria include underlying quality (stocks with strong fundamentals and revenue trajectory), elevated implied volatility (IV percentile above 50, ideally 60+), strike by delta (targeting 10-15 delta for a wide buffer, far out of the money), and a premium check (annualized yield beating short-term put selling). The strategy leverages the 'vega advantage' of LEAP puts, which are more sensitive to volatility changes than near-term puts. The analysis also highlights the risks, including capital being tied up for 12-18 months, the impact of sustained bear markets, the large outlay required for assignment, and the complexity and cost of rolling positions. The goal is to collect a large premium upfront and potentially lower the effective cost basis before selling covered calls, aiming for a higher annualized return potential and a wider break-even point than standard short-term wheel trades. The examples provided for COIN, HOOD, NVDA, and TSLA illustrate these principles, with specific strike prices and expiration dates chosen based on the framework, aiming for significant downside protection and acceptable annualized returns.

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