Selling Naked Puts — Why I NEVER Hold Long-Dated Ones (The Rule Protecting My $2.8M)
Summary
David Jaffe explains why selling long-dated naked puts is dangerous due to extended risk exposure and margin call potential during market crashes. He advocates for his "short the risk, long the reward" rule, keeping put obligations short-term while maintaining long-term upside through call debit spreads. Jaffe demonstrates this strategy with real trades on Micron and SMH, showing how rolling positions in can reduce risk while collecting credits.
Topics discussed
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Intro: The rule of short risk, long reward
Why long-dated naked puts are dangerous
How crashes inflate long-dated put risk
Case study: Rolling Micron puts to reduce risk
SMH trade structure: Financing upside with short risk
How rolling works and the theta decay advantage
The margin call trap and portfolio verification
Live plan: Rolling SMH puts to shrink risk window
Conclusion, host bio, and call to action
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