One of the most satisfying moments in options trading is placing a limit order and having it filled at a better price than you specified. In this trade walkthrough, we placed a cash-secured put order on Bath & Body Works (BBWI) at a $0.65 limit and were pleasantly surprised when it filled at $0.80 the next morning.
This single trade generated $80 in premium using $4,300 in collateral, delivering nearly 2% ROI in just one week. When you annualize that return, you're looking at approximately 104% annually. While past performance doesn't guarantee future results, this demonstrates the income generation potential of consistently selling cash-secured puts on quality underlying stocks.
When selling cash-secured puts, your limit price determines the minimum premium you're willing to accept. In this case, the order was placed Sunday evening on Schwab's thinkorswim platform with a $0.65 limit, targeting at least 1% ROI for the week.
The order filled at $0.80 instead of the $0.65 limit for several reasons:
Step 1: Determine your target weekly ROI (typically 1% or higher)
Step 2: Calculate collateral required = Strike Price × 100
shares
Example: $43 strike × 100 = $4,300 collateral
Step 3: Calculate minimum premium = Collateral × Target ROI
Example: $4,300 × 1% = $43 minimum premium
Step 4: Convert to per-contract limit price
Example: $43 ÷ 100 = $0.43 per share minimum
Result: In this trade, the $0.65 limit was well above the 1% minimum, and the $0.80 fill exceeded expectations by 23%.
This strategy of setting conservative limit orders and waiting for favorable fills allows you to be selective about which trades you take. You're not chasing every opportunity, only accepting premium that meets your minimum ROI requirements.
After the order filled on Monday morning, the next critical step is accurately recording the transaction in your cost basis tracking system. Using MyATMM simplifies this process and ensures you maintain accurate records for both performance tracking and tax purposes.
Here's the exact workflow demonstrated in the video for tracking this BBWI cash-secured put:
MyATMM automatically maintains a running total of all premium collected on each ticker. After saving this transaction, the system displayed total premium collected of $143.60 across all BBWI transactions. This cumulative tracking becomes essential when:
By Friday, February 9th, BBWI stock was trading above the $43 strike price. This is exactly what you want as a cash-secured put seller. When the stock stays above your strike at expiration, your put option expires worthless and you keep 100% of the premium with no assignment obligation.
When your cash-secured put expires worthless:
While you could wait until Monday to update your tracking system, it's good practice to mark expired positions as closed:
The beauty of this weekly approach is you don't need to monitor positions daily. Checking once per week on Sunday allows you to review what expired, calculate new positions for the coming week, and place your orders for Monday execution.
After banking $79.33 from the expired position, the next step is evaluating whether to continue the wheel strategy on BBWI or move capital to a different underlying. The video demonstrates this weekly analysis process using thinkorswim's Analyze tab.
For the upcoming expiration on February 16th (5 days out), the available premium was $0.50 at the preferred strike. Here's the thought process:
| Expiration Date | Days to Expiration (DTE) | Premium Available | Premium Per Day | Analysis |
|---|---|---|---|---|
| February 16 | 5 days | $0.50 | $0.10/day | Weekly baseline |
| February 23 | 12 days | $0.85 | $0.071/day | Less efficient - only $0.35 more for 7 additional days |
| March 1 | 19 days | $1.85 | $0.097/day | Most efficient - collecting more than weekly rate |
| March 8 | 26 days | $2.00 | $0.077/day | Right at weekly rate ($0.50 × 4 weeks) |
The March 1st expiration stood out because it offered $1.85 in premium for a 19-day period. If you break this down:
When analyzing the March 1st expiration, there's a significant premium increase that correlates with BBWI's earnings date. Options premiums typically expand before earnings announcements due to increased implied volatility. While this offers higher income potential, it also introduces additional risk if the stock makes a large move on earnings news.
Despite the slightly better premium efficiency on the March 1st contract, the video demonstrates a preference for continuing with weekly expirations. Here's why:
After deciding to continue with BBWI for another weekly cycle, the next step is determining the optimal limit price for the February 16th expiration.
The February 16th expiration showed a bid-ask spread of $0.50 to $0.65. This 15-cent spread is relatively wide, which creates both opportunity and risk:
Bid Price: $0.50 (price market makers are willing to pay)
Ask Price: $0.65 (price market makers want to receive)
Spread Width: $0.15
Midpoint: ($0.50 + $0.65) ÷ 2 = $0.575
Limit Price Selected: $0.57 (just below midpoint)
Rationale: Placing a limit slightly below the midpoint increases fill probability while still capturing favorable premium above the bid price.
At a $0.57 limit price, the expected premium collection would be:
The projected $56.33 net premium is notably less than the $79.33 collected the previous week. This difference is primarily due to the stock price dropping approximately $0.70 from the prior week, which reduces the collateral requirement and naturally compresses option premiums. Despite the lower dollar amount, the percentage ROI of 1.26% remains attractive and above the minimum 1% weekly threshold.
While the examples in this walkthrough use single contracts for demonstration purposes, the beauty of this strategy is its scalability. The percentages and risk characteristics remain consistent whether you're trading 1 contract or 100.
| Contracts | Premium (@ $0.57) | Collateral Required | Weekly ROI | Annual ROI (Est.) |
|---|---|---|---|---|
| 1 | $57.00 | $4,472 | 1.26% | 65.5% |
| 10 | $570.00 | $44,720 | 1.26% | 65.5% |
| 50 | $2,850.00 | $223,600 | 1.26% | 65.5% |
| 100 | $5,700.00 | $447,200 | 1.26% | 65.5% |
As demonstrated in the table above, the percentage returns remain identical regardless of how many contracts you trade. What changes is the absolute dollar amount of premium collected and capital required.
Before increasing your contract quantity, consider these factors:
Phase 1: Start with 1 contract per position to learn the mechanics and build confidence
Phase 2: Once comfortable, scale to 2-5 contracts per position while diversifying across multiple tickers
Phase 3: As capital and experience grow, allocate position sizes based on portfolio percentage (e.g., 5% max per ticker)
Phase 4: Advanced traders may run 10-50 contracts per position, but only after mastering assignment management, rolling strategies, and risk mitigation techniques
After confirming the limit price of $0.57, the order was sent through thinkorswim's order entry system. The order queues for Monday morning execution, and if market conditions are favorable, it should fill at or better than the $0.57 limit (as happened with the previous week's $0.80 fill on a $0.65 limit).
On Monday morning, there are three possible outcomes:
If your order doesn't execute Monday morning, you have several options: (1) Wait to see if volatility increases during the day, bringing premiums back up to your target, (2) Adjust your limit price lower if you're willing to accept less premium, (3) Cancel the order and look for better opportunities on different underlying stocks, or (4) Wait until later in the week when time decay accelerates and premiums may expand.
The video emphasizes the power of a consistent weekly routine that doesn't require daily monitoring:
This once-per-week engagement model makes cash-secured put selling accessible to traders who don't want to monitor positions constantly. You can maintain other commitments throughout the week while consistently generating option premium income.
Throughout this trade example, MyATMM served as the central tracking hub for accurately recording transactions, calculating net premium after fees, and maintaining cumulative performance metrics. Here's why purpose-built cost basis tracking matters for option sellers:
If this BBWI put had been assigned instead of expiring worthless, you would own 100 shares at $43 per share. However, your true cost basis would be $43.00 minus the $1.44 in cumulative premium collected ($143.60 total premium ÷ 100 shares), resulting in an adjusted cost basis of $41.56 per share. Most brokerage platforms don't track this adjustment automatically, leading to inaccurate performance reporting and potential tax miscalculations.
MyATMM offers a free account tier that allows tracking up to 3 tickers forever. This is perfect for traders who:
As your trading expands beyond 3 tickers, paid memberships start at just $4.95/month for unlimited ticker tracking, making it significantly more affordable than complex portfolio management software while staying focused exclusively on the needs of option sellers.
While this BBWI trade resulted in full premium capture with no assignment, it's essential to understand the risks involved in cash-secured put selling and how to manage them effectively.
Experienced cash-secured put sellers employ several techniques to manage these risks:
Assignment isn't a failure—it's part of the wheel strategy. If assigned shares:
This BBWI trade walkthrough demonstrates the practical execution of weekly cash-secured put selling as an income generation strategy. While results will vary based on market conditions, underlying selection, and timing, the fundamental principles remain consistent.
The nearly 2% weekly return on this BBWI cash-secured put translates to approximately 104% annualized return when compounded consistently. While no strategy guarantees these results every week, maintaining disciplined position selection, risk management, and accurate tracking creates a framework for generating consistent option income over time.
Options trading involves substantial risk and is not suitable for all investors. Cash-secured put selling obligates you to purchase shares at the strike price regardless of how far the stock price declines. Past performance, including the 2% weekly ROI demonstrated in this example, does not guarantee future results.
The scenarios described in this article are for educational purposes only and should not be considered personalized financial advice. Before engaging in options trading, consider your investment objectives, risk tolerance, and financial situation. Consult with a qualified financial advisor or tax professional regarding your specific circumstances.
Annualized returns assume consistent weekly performance, which is unrealistic in actual trading conditions. Market volatility, assignment events, and changing premium levels will affect real-world results. Always understand the mechanics and risks of any options strategy before deploying capital.
MyATMM makes it simple to track cost basis, premium collection, and performance across all your option selling strategies. Get started with a free account and track up to 3 tickers forever.
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