Can We Generate Significant Returns with a Defensive 4-Day Cash-Secured Put Trade?

In bear and volatile markets, our cash-secured put trades (covered calls too) should be structured in a defensive manner. Greater protection to the downside typically means lower returns. That’s the tradeoff. We may opt for weekly trades which frequently result in higher annualized returns. What if we are in a holiday-shortened week, creating 4-day trades? Can we still generate significant premium returns with elite-performing underlying securities? In this article, a real-life example with Agnico Eagle Mines Limited (Nasdaq: AEM) will be examined to show that, yes, this is frequently possible. This trade (10 contracts) was taken directly from one of Alan’s portfolios.

AEM from our BCI Premium Stock Screen & Watch List

• AEM: $117.06
• #7 on IBD 50
• 1.20% dividend yield
• Ex-dividend date 2/28/2025
• Robust implied volatility (IV): 64.40%
• Industry segment rank: A (Mining)
• Next ER: 4/24/2025
• Bullish On Balance Volume (OBV)
• Analyst rating (MAR) a stellar 1.56
• Weekly options not available
• On our premium watch list for 4 weeks
• The $110.00 4/17/2025 deep OTM put strike has a bid price of $0.55

 

4-day initial calculations using the BCI Trade Management Calculator (TMC)

• The initial 4-day (Good Friday holiday) option return is significant (0.50%, 45.85% annualized- brown cells)
• If share value drops below the $110.00 strike price, and no exit strategy intervention is taken, shares are purchased at the breakeven strike price ($109.45 yellow cell), a 6.50% discount (purple cell) from share price when the trade was executed

 

Broker confirmation of AEM put sales including commissions

A credit of $293.35 was added to the cash account.

 

Final trade results

On Thursday 4/17/2025 (expiration Thursday), AEM closed well above the $110.00 put strike. The 0.50% 4-day trade, 45.85% annualized trade was realized.

 

Discussion

Using a well-thought-out screening process to generate a watchlist of elite-performing securities, will allow us to both take defensive postures with our trades while also allowing for significant returns. As always, we must be prepared to use our exit strategies if and when those opportunities arise.

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Covered Call Writing Alternative Strategies

Portfolio Overwriting- using stocks in buy-and-hold portfolios
The Collar Strategy- using protective puts
The Poor Man’s Covered Call- using LEAPS options
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Covered call writing is a cash-generating strategy that lowers our cost basis thereby improving our opportunities for successful investments. One of the many benefits of incorporating this strategy into our investment portfolios is that the system can be crafted to meet our trading style, market assessment, portfolio net worth and personal risk tolerance. This book details three such covered call writing-like strategies.

Click here for information.

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Your generous testimonials

Over the years, the BCI community has been incredibly gracious by sending our BCI team email testimonials sharing stories as to what our educational content has meant to their families. Moving forward, we have decided to publish several of these testimonials in our blog articles. We will never use a last name unless given permission:

Upcoming events

1.Mad Hedge Investor Summit

Tuesday September 9, 2025

11 AM ET

Details to follow.

2. BCI Educational Series Webinar # 8: New Credit Spread Calculator

Thursday September 18,2025

8 PM ET – 9:30 PM ET

Over the past 2 years, BCI has been developing and beta-testing a 1-of-a-kind spreadsheet for entering and adjusting our credit spread trades. Like our Trade Management Calculator (TMC), our goal was to make it the industry standard. Only you can decide if we accomplished our mission.

Alan & Barry will introduce this product, review all the tabs inherent in the spreadsheet and demonstrate how to use it. A 1-time early order discount will also be offered.

For those who trade, or are interested in learning how to trade, credit spreads, this is a must-see webinar.

Click here to register for free.

3. Orlando Money Show

Orlando Resort @ ChampionsGate

October 16 – 18, 2025

• Opening ceremony keynote address
• 45-minute workshop class: Traditional & Low-Risk Covered Call & Cash-Secured Put Trades

Details and registration link to follow.

4. Money Masters Symposium Sarasota Florida

December 1 – 3,2025

Setting Up Option Portfolios Using Stock Selection, Diversification, Cash Allocation and Calculations

Analysis of 6 covered call writing trades

Minimize risk and maximize returns. These are our 2 main goals when crafting our option portfolios. There are several factors we can utilize which will put ourselves in an outstanding position to achieve these objectives. Here is a summary of those factors which will be addressed during this presentation:

• Select elite-performing stocks and ETFs
• Diversity stock positions as well as their industries
• Allocate a similar amount of cash per-position
• Ensure that initial calculations align with strategy goals and personal risk-tolerance
• Once trades are entered, go into position management mode- be prepared for exit strategy opportunities

Registration link to follow.