Selling Covered Puts: Best Conditions & How to Avoid Assignment
5paisa Research Team
Last Updated: 02 May, 2025 05:19 PM IST

Content
- Understanding Covered Puts
- Optimal Conditions for Selling Covered Puts
- Avoiding Option Assignment and Managing Risk
- Key Takeaways
Selling covered puts is a moderately bearish options strategy used to generate income and potentially hedge a short stock position. This strategy involves selling put options while simultaneously shorting the underlying stock. It's considered “covered” because the short stock position offsets the downside obligation of the sold put.
This article will explore the optimal conditions for selling covered puts and how you can avoid unwanted option assignments. By understanding the right market environment and employing effective risk management techniques, you can use this strategy to your advantage.
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