LEAPS Puts vs. 30 to 45 Day Cash-Secured Puts

Selling puts is one of the most straightforward ways to generate income in the options market. But the length of time you sell them for changes the trade entirely.

At one extreme are LEAPS puts, contracts that expire 12 to 24 months from now. They move slower, carry more upfront premium, and suit traders with a long-term view.

On the other end are 30-45 day cash-secured puts, shorter-dated trades designed for faster turnover, compounding, and more active management.

Both can make money. Both can lose money. But the “better” strategy depends on how you use them, what you expect from the trade, and how much attention you can give it.

Understanding LEAPS Puts - Getting Paid to Wait

Selling LEAPS puts is essentially collecting premium while you wait for a stock or ETF to reach the price you want. Think of it as getting paid for having a standing buy limit order.

A LEAPS put works like any other put option:

• You agree to buy the stock at the strike price if the buyer exercises.

• You collect premium upfront for taking that obligation.

• If the stock never hits your strike before expiration, you keep the full premium.

Because LEAPS have so much time value, they’re generally less volatile day-to-day than shorter-term options. They’re also more expensive because of that extra time, which means more premium in your pocket at the start.

Example:
If Microsoft (MSFT) trades at $522 but you want it below the expected move, or $420 at $410, you might sell a September 2026 $410 put for a limit price of $12.10. That’s $1,210 in premium. If MSFT stays above $410 for the next 405 days, you keep all of it. If it drops below, you buy at $410, a price you already decided you’d like.

That’s a 2.95% return on capital.

When LEAPS Puts Make Sense:

• You want to own the stock at a discount.

• You have high conviction in the company long-term.

• You’re comfortable tying up capital for 1-2 years.

Understanding 30-45 Day Cash-Secured Puts - The Income Engine

A 30–45 day put is short enough to benefit from fast time decay but long enough to avoid the high gamma risk of ultra-short contracts. These trades are designed for repeatability.

They require more attention than LEAPS because you’re managing them every month, but they let you recycle capital several times a year, potentially creating a higher annualized return than one big LEAPS position.

Example:
Sell the 40-day $480 put at a limit price of $2.38. The $480 strike sits comfortably below the expected move of $497.50. If the stock remains above $480 through expiration, you keep the $238 in premium. Repeat this type of trade 8-10 times over the course of a year and, assuming disciplined loss management, the total income far surpasses the one-time payoff of a LEAPS position. For example, selling the same premium nine times at $2.38 each would generate roughly $2,142 in total premium, practically double the return from the LEAPS put contract.

When 30–45 Day Puts Make Sense:

• You want regular cash flow.

• You can monitor and roll positions.

• You prefer flexibility over tying up capital long-term.

Why LEAPS Puts Simply Don’t Make Sense - A Critical Perspective

Frankly, selling LEAPS puts just doesn’t make sense to me from both a theoretical and practical standpoint. The opportunity cost alone should eliminate this strategy from serious consideration. Why would anyone advocate tying up capital for 12-24 months at a measly 2.95% annualized return when 30-45 day cash-secured puts can generate significantly greater annualized returns through systematic recycling of capital?

The math is overwhelmingly in favor of shorter-duration puts, and academic research backs it up:

• Israelov & Nielsen (2015): “Covered Call Strategies: One Fact and Eight Myths” - shorter-term options capture theta decay most efficiently in the 30–45 day window, where time decay accelerates without excessive gamma risk.

• Poteshman & Serbin: Monthly put cycles significantly outperform longer-dated strategies on a risk-adjusted basis.

• Shefrin & Statman: Behavioral finance research shows LEAPS sellers often fall victim to “commitment bias”- locking themselves into positions that prevent adaptation to changing market conditions.

Shorter-dated puts offer what one might call “intelligent flexibility”, the ability to adjust strikes, roll positions, and respond to volatility regime changes. Liquidity alone strengthens the case: shorter-dated options have tighter bid-ask spreads, better execution, and superior price discovery. Add the psychological benefits of regular income generation and the compounding effect of monthly premium capture, and LEAPS puts look like a solution in search of a problem.

Side-by-Side: The Practical Differences

From a portfolio management standpoint, most professionals lean significantly heavier on short-term income trades. In fact, I don’t know anyone who uses LEAPS puts, but there are a few articles out there that claim people do….I guess I just haven’t come across one over the past 23+ years of my professional career.

Probabilities over predictions,
Andy Crowder

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