Should I Flip the Cards Over and Start Buying Puts?
Many options traders are drawn to buying Puts, particularly in times of increased volatility like we’ve had recently. It seems intuitive, right? The market is likely to go down so let’s make some money buying Puts. Not so fast…you still have to consider direction, magnitude and timing. If you think the market or a stock is overvalued, buying a Put appears to be the smart move. In theory, it sounds simple: predict a decline and profit from it. But in reality, buying Puts is one of the most difficult ways to consistently make money in options trading.
Over the years, I’ve come across many trader friends who have tried this. They buy (long) Puts when the market looked overextended. Smarter friends use these as a hedge against sell offs. They buy Puts when the news looked bearish. They buy Puts when volatility spiked and everyone on CNBC was predicting a crash.
And most of the time, those trades lost money.
The reason is simple: buying Puts requires you to be right about multiple variables at the same time (direction, magnitude and timing), and even when you are correct about direction, the trade can still lose if you are wrong on the magnitude or the timing. I recently did a post about Why I Don’t Buy Long Calls, with similar rationale. Options are complex instruments influenced by time decay, volatility, and pricing dynamics that often work against buyers.
That’s why the Put Paradise philosophy is different. Instead of buying options and hoping for a big move, the Put Path system focuses on selling defined-risk Put Credit Spreads with high probability of profit. This approach turns the math of options trading in your favor and removes the need to make bold directional predictions.
In this article, I’ll explain three major reasons why I don’t buy Puts and what we do instead.
Buying Puts Requires You to Be Perfect on Direction, Magnitude, and Timing
When you buy a Put option, you are making a very specific bet. If you want to be profitable, you are predicting:
- The market will go down
- It will go down far enough
- It will happen before expiration
Getting all three correct consistently is extremely difficult. Let’s say you buy a Put on an ETF that is trading at $500. You purchase a $490 Put that expires in four weeks. In the first few days, imagine the ETF drops slightly to $495, you might assume your Put will become profitable, but that is not always the case.
If the decline is too small or too slow, time decay (Theta) begins eroding the value of the option, which may be more the directional value that worked in your favor. Every day that passes reduces the premium of long options. It’s very important to understand, that even if the underlying moves slightly in your favor, the loss from time decay can offset the gain.
This creates a frustrating situation for many traders: they were correct about direction, yet the trade still can lose money. Options pricing is influenced by several variables including price movement, time remaining until expiration, and volatility expectations. Because of this, small or gradual market moves often fail to produce enough profit to overcome the premium paid for the option. This is one of the main reasons so many traders struggle with buying Puts.
Instead of making a high-precision directional bet, the Put Path system uses short Put Credit Spreads positioned far Out-of-The-Money. These trades benefit when the market goes up, stays flat, or even falls slightly. Rather than requiring a perfect prediction, the system allows a wide margin for error.
Put Buyers Fight Hard Against Time Decay
Let’s dig a little deeper into a major disadvantage of buying Puts, which is time decay, also known as Theta. Every option has an expiration date. As time goes by, the option gradually loses value. This is not speculation, it is a mathematical certainty built into the pricing of options contracts.
In simple terms, time works against option buyers and in favor of option sellers.
When you buy a Put, you are paying a premium for the possibility that the underlying will fall. If that move does not happen quickly, the value of the option erodes each day. Many traders underestimate how powerful this effect is. A Put option that looks attractive when you purchase it will steadily lose value if the stock price barely moves. The clock is constantly ticking, and that ticking represents a slow drain on the option’s price. Option sellers, on the other hand, benefit from this same dynamic.
The Put Path system intentionally sells options with approximately 28 days to expiration, which is a period where time decay begins accelerating. Each passing day reduces the value of the option sold, which allows us to buy it back later at a lower price ($0.02). In other words, instead of fighting time decay, the system allows time decay to work for you. This is a fundamental philosophical difference between buying options and selling them.
Buyers need a strong and fast move to overcome time decay. Sellers simply need the market to behave normally. Some full time traders are stuck to screens all day long trying to scalp and buying Puts, but that is not our philosophy. The stress of that just sounds awful, and I’d rather be outside doing something fun or be focused on being productive at work.
Put Options Are Often Expensive Because Fear Is Expensive
Markets are driven by emotion, and one of the strongest emotions investors experience is fear. When markets become volatile or begin declining, many traders rush to buy Puts as protection. This surge in demand increases implied volatility, which in turn raises the price of Put options. Basically, when everyone is afraid, Puts become more expensive.
This creates an interesting opportunity. If options become overpriced due to fear, traders who sell those options (like us) can potentially capture that inflated premium. We try to profit on our far Out-of-The-Money Puts that often carry expanded volatility premium relative to their expected risk. Instead of buying expensive protection, our strategy sells Out-of-The-Money Puts with a low Delta, typically around 0.15. This means the strike price is far enough away that the market has a high probability of staying above it.
When options carry higher premium from volatility, we are able to collect more income while maintaining a buffer between the current price and the strike price. In fact, during high volatility, we are able to select strike prices farther away from the current stock price, which actually increases our safety margin. So again, our approach with Put Paradise is to have high probability trades, defined risk, and mechanical execution.
The strategy does not rely on predicting a crash or timing the market perfectly. Instead, it focuses on selling options where the probabilities and pricing dynamics provide a structural advantage.
Conclusion: Sell Defined-Risk Spreads Instead of Buying Puts
Buying Puts can occasionally produce spectacular profits during large market crashes. There is no denying that possibility. But for most traders, most of the time, buying Puts is simply too difficult and time consuming to profit consistently. The trade requires you to correctly predict direction, magnitude, and timing. That is a tough combination.
So the Put Path Options Trading System takes a different approach. Instead of betting on large directional moves, it focuses on high-probability Put Credit Spreads with defined risk. These trades are positioned far Out-of-The-Money, diversified across multiple ETFs, and managed with a strict closing rule using the 200% stop loss. The goal is not to hit home runs. The goal is to build consistent income over time while minimizing risk and complexity.
Trading should not require staring at a screen all day or making constant predictions about where the market or a particular stock will go next. With the right structure, options trading can become a mechanical process that takes only a few minutes each week. If you want to learn exactly how the Put Path system works, explore the other posts here on Put Paradise and watch our videos. Remember, options trading is better when it’s not done in isolation: leave a comment below with your thoughts or questions, and let’s keep the conversation going!
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