Sell Short-Dated Put Options on Crude Oil Futures for Income

about 2 months ago

Patrick Ceresna

"For me, this is a perfect candidate for income writing on the futures. I am attracted to selling puts further out into the end of the year where my break-even would be closer to the year-to-date lows near the $55 to $57 range. On page 4 of the Trade of the Week download, the $57 strike on the January 2026 crude oil futures chart is highlighted. At the time of recording, the 96-day put is bidding around $1.82, which translates to an annualized return of roughly 12% for an unleveraged, cash-secured put. For retail investors, ETFs like the United States Oil Fund (USO) can be used if they prefer not to use futures."

The trade call recommends selling short-dated put options on crude oil futures with a strike price of approximately $57, as a means to generate income while limiting downside exposure. The strategy capitalizes on the current fair value zone (between $60 and $70) and is supported by quantitative details such as a premium of about $1.82, yielding an annualized return near 12%. The suggestion includes a retail alternative using the USO ETF.

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