Selling puts are like selling insurance. For a small premium, you underwrite risk. It is like picking pennies in front of road roller, etc. Bottom line it is risky, understand what you are doing.
With the risk disclaimer out of the way, I have sold a punch of WY Jan 2023 $20 puts. I have sold some at the end of last year, and added some more and recently sold it for $0.5.
If you are doing a cash covered put, that would give you 3.6% annualized yield. Few thoughts on why I did this:
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Fed is trying to engineer a recession, because their tools cannot do anything on the supply, but demand destruction they can do; so they are going to work on demand destruction.
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Now, Fed destroying demand, and supply chain easing, inflation will come down, and when takes its foot off the economy’s throat, demand will come back but supply will be there to meet it and hopefully we don’t see inflation.
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the biggest demand for Timber firms are housing; I think housing structurally has under supplied from the housing crash, while the prices recovered, the supply didn’t really caught up. Also, the total housing has significant older houses and replacing them, new home formation all will drive demand. So houses will be build and they require timber.
Long story short if it gets to $20, I will buy, I will buy very large quantity. WY base dividend at that price will yield close to 5%. And I can wait for the recovery.