Consistently selling puts and calls for weekly income
A few things I learned the hard way:
Use ES puts, not SPY puts Weekly ES options are European style — the buyer can't exercise early. SPY is American style, early assignment is a real risk. ES also gets Section 1256 tax treatment (60/40 split). SPY options don't. Same trade, meaningfully different tax bill.
One main advantage to selling /es put options is that they open on Sunday exactly at 5pm CST or 6pm est. You're able to sell at a time when the normal market is closed. This provides about 15 hours worth of premium as opposed to selling on Monday. I
Only sell in uptrends I check EMAs before every trade. If ES is below them I don't sell that week. Full stop. Insurance companies don't write policies into hurricanes — same logic applies here.
No stop losses — take assignment if struck I let every trade run to expiration. If assigned I hold the long ES futures position until recovery. In 5 years max drawdown from assignment has been 3.73%, average recovery about 7 days.
The numbers since 2020:
- 99% of puts expired worthless
- ~$312 average weekly premium per contract
app link: https://putyield.com/
| Feature | ES Puts (What We Trade) | SPX / XSP Puts | SPY Puts |
|---|---|---|---|
| Exercise Style | European — no early assignment risk | European — no early assignment risk | American — early assignment at any time |
| Tax Treatment | Section 1256 — 60% long / 40% short term | Section 1256 — 60% long / 40% short term | Equity option — 100% short-term rates |
| Dividend Risk | None — futures pay no dividends | None — cash settled index | Quarterly dividend triggers early exercise risk |
| Trading Hours | 23 hrs/day — enter Sunday night at Globex open | Regular market hours only | Regular market hours only |
| Capital Efficiency | Futures margin — most efficient | Moderate | Similar to SPX but smaller |
| On Assignment | Long ES futures — hold and sell next Sunday's put | Cash settled — no position to hold | Assigned ETF shares — additional management |