Over the last couple of years, I’ve been preparing for my post-active income era, where the name of the game isn’t just growth, but capital efficiency. I want my money to work harder while I take less risk. One of my go-to strategies in this pursuit?
Collateralized put writing.
It’s not new. It’s not flashy. But it’s one of the most reliable ways I’ve found to get paid while I wait—locking in discounts on stocks I want to own anyway, collecting premiums upfront, and putting my idle capital to work in treasuries while I wait for the market to come to me.
I recently stumbled on this great piece by Neuberger Berman that explains the logic behind this strategy really well (it motivated me to write this post, as I’ve been doing this for the last couple of years with the substantial increase in interest rates). I’ll be borrowing a few of their visuals (with credit), and breaking it all down into plain-English.
So, What’s “Put Writing”—Really?
Put writing, at its core, is about selling someone else the right to sell you a stock at a pre-agreed price (the “strike price”) before or on a certain date (the “expiry”). In exchange, you get paid a premium upfront.
If the stock falls below the strike price? You buy it at that price (which you were happy to pay anyway). If it doesn’t? You keep the premium and move on.
It’s like placing a limit order and getting paid while you wait.
Visual from the article:
I’m not trying to time the market. I’m trying to own great assets at better prices—or get paid to not own them at all.
Why I Use Collateralized Puts
The big caveat here is that I only write cash-secured or collateralized puts. That means I have the capital set aside—fully collateralized—to buy the stock if I’m assigned. I’m not using margin, I’m not gambling. I treat the premium income as a bonus on top of 4.25%+ yield I’m earning on T-bills while the trade is open.
It’s about risk-mitigation first, return second.
There’s a world of difference between being speculative and being strategically opportunistic.
Here’s why I love this strategy right now:
- Capital security – I’m covered. No margin calls.
- Premium income + interest income – A two-for-one.
- Price discipline & discount – I define what I’m willing to pay (like setting a limit order) and get paid for waiting to see if I get “filled” at below market prices.
- Elevated volatility = fatter premiums – When fear rises, I get paid more.
This setup works best when interest rates are elevated – even better when volatility spikes, because premiums get fatter.
But Isn’t There Risk?
Of course there’s risk. You could be assigned the stock that drops even further. That’s why I only sell puts:
- On companies I’d be happy to own at the strike price less the premium collected (effective price).
- At position sizes I’m comfortable holding.
- When the risk-reward makes sense based on the premium and fundamentals.
Put writing isn’t a set-it-and-forget-it gimmick. It’s an intentional way to own stocks cheaper—or not at all—and still get paid.
Pro Tip: Don’t sell puts on meme stocks. Stick to names with real earnings, durable advantages, and sound balance sheets.
What the Data Shows (Hint: It Works Over Time)
The Neuberger Berman article shows a consistent track record for collateralized put writing.
Visual from the article:
You won’t always beat the market, but your drawdowns will be reduced significantly. And when you stack premium income + interest on collateral, the net effect compounds fast.
Put writing is like selling insurance in a market that often overprices fear—and underprices patience. (Volatility ≠ Risk. Volatility = Opportunity)
How I’m Doing It Today
Right now, I’m mostly writing puts with 45 to 365 days to expiration on:
- Large-caps I already follow (like TSLA, AMZN, GOOG, BLK).
- ETFs (like SPY, QQQ, IWM, TLT, IBIT – yes, some Bitcoin).
- Stocks I’d buy at a 5–15% discount from current levels.
I keep my allocation to this strategy disciplined, and at any given time I only use 25-50% of the collateral available (mostly t-bills but some cash, never margin). The result? A steady stream of income that doesn’t require me to chase returns or sit in cash waiting for corrections.
Here is a summary of the Interest + Premium that I’ve earned so far:
- 2023: ~$65,000
- 2024: ~$190,000
- 2025 YTD ~$301,000
Note: The amounts above have continued to increase because the amount of treasuries or cash I have/had in my brokerage has increased substantially from year to year due to liquidity from my business equity. I started moving funds to my brokerage in September of 2022 and made my first treasuries purchase in October of 2022 in the amount of $200K. Today in July of 2025, I hold ~$3.1M in short-term treasuries. This strategy is in addition to dollar cost averaging about $40,000 per month into index funds and the occasional lump sum purchase when prices are attractive (like the April 2025 sell-off when the S&P 500 was down 19% at one point).
Final Thoughts
We’re in a high-rate, high-valuation, low-yield world. Most people don’t realize there’s a way to turn waiting into a consistent cash flow strategy that also keeps you protected.
Selling collateralized puts is a way of monetizing patience, discipline, and liquidity. And in this phase of my financial life—that’s exactly the kind of edge I want.
If you want to go deeper into the mechanics, check out the original piece that inspired this post from Neuberger Berman: Putting Put Writing Into Perspective
In the meantime, I’ll be over here… getting paid to wait.
– Gen Y Finance Guy
