Profiting with Defensive Cash-Secured Puts: An NTES Case Study

Profiting with Defensive Cash-Secured Puts: An NTES Case Study

Cash-secured put trades offer a conservative approach to generating income in the options market. By strategically employing deep out-of-the-money (OTM) strikes, investors can craft positions designed for capital preservation while still achieving notable returns. On May 27, 2025, a prime example of such a strategy was executed with NetEase Inc. (Nasdaq: NTES), a prominent stock then featured on our premium member watch list. This article delves into the detailed rationale behind the trade entry, the careful selection of strike prices, and the ultimate successful outcome of this 4-day defensive trade. The Core Strategy: Defensive Cash-Secured Puts A cash-secured put involves selling a put option and simultaneously setting aside enough cash to purchase the underlying stock if it falls below the strike price and the option is exercised. The "defensive" aspect comes into play by choosing deep OTM strikes, meaning the strike price is significantly below the current market price of…