How to Take Partial Profits on Cash Secured Puts

There are three partial profit techniques you’ll typically see for The Wheel Strategy: the 50% Rule, the Turbocharge Rule, and the 80% Profit Target.

Each gives you a systematic exit.

The technique you choose matters far less than whether you have a better use for the freed capital (which is pretty much the entire point of this article).

If your CSP is underwater instead, I cover the losing side in What to Do If Your Cash Secured Put is Losing Money.

This tutorial is about the opposite problem (and yes, having a winning trade can be a problem if you mismanage the exit).

The 50% Rule (Close at Half Your Premium)

The 50% Rule is the simplest of the three techniques.

Set a GTC (Good ‘Til Cancelled) limit buy order at 50% of the premium you collected, immediately after opening the trade.

A GTC order stays open until it fills or you cancel it. You don’t have to babysit it. You don’t have to time your exit. The order fires when the option’s price drops to your target, and the position closes automatically.

For example:

• Sell a CSP for $4.00
• Set a GTC limit buy at $2.00
• When the option’s price decays to $2.00, the order fills and you pocket the difference

If you trade 30-52 DTE like I do (and normally recommend), these orders tend to fire within the first 1-2 weeks of opening the position, typically due to the stock going on a run.

Essentially, you’re harvesting the easiest portion of the premium curve, then freeing up your capital to do it again.

The 50% Rule in Action

Above is a real trade on SSRM from my trading journal:

• SSRM put, $24 strike
• Sold (STO) at $1.30
• Closed (BTC) at $0.20
• Held for 8 days
• $110 profit
• 84.62% premium captured (% Gain)
• 209.11% annualized yield
• 4.58% ROC

A quick note on “% Gain” since this is the first time you’re seeing it:

% Gain is the percentage of premium captured (profit divided by premium collected). It measures trade efficiency.

In this case, I captured 84.62% of the available premium, well above the 50% target.

Why did I exceed 50%? The option decayed past my order price before the fill triggered. That’s the beauty of GTC orders. Set it and let the market come to you.

Note: ROC (Return on Capital) and annualized yield are separate metrics I run on every trade. ROC shows capital efficiency; annualized yield projects that return over a full year. I’m not going to re-teach them here, but those links have the full breakdowns.

The Turbocharge Rule (Exit Early When Profits Come Fast)

If your position is up 25-50% within the first 4-7 days, consider closing early.

Unlike the 50% Rule (which is mechanical), the Turbocharge Rule is more art than science.

The 4-7 day window is not hard and fast. Allow a couple days of flexibility in either direction.

Why does the timeframe matter? You’re sitting on a meaningful gain with 20+ days of risk ahead of you for diminishing returns.

The question becomes:

Is the remaining premium worth the remaining risk?

Could you hold longer? Absolutely.

But sometimes the answer is no, especially when:

• You have significant capital tied up in the position
• The macro environment is shifting
• Your screeners are showing better opportunities

That last point is the most important. If there is a better opportunity available for you, it may be worth taking your profits and moving on to the next position.

The Turbocharge Rule in Action

Here is a trade on CLS where I applied the Turbocharge Rule:

• CLS put, $250 strike
• Sold (STO) at $13.42
• Closed (BTC) at $9.90
• Held for 8 calendar days
• $352 profit
• 26.23% premium captured (% Gain)
• 1.41% ROC
• 64.24% annualized yield
• $25,000 in capital tied up

Look at that % Gain: 26.23%. Far lower than the SSRM trade. But look at the annualized yield: 64.24%.

The speed of the gain is the story here, not the percentage captured.

I had $25,000 tied up per contract in this position, and the macro environment was shifting.

Rather than ride it out and hope for more, I closed, locked in $352, and freed up that capital.

Sometimes derisking is the better use of your capital.

Not every early exit needs a replacement trade lined up, sometimes the broader market is giving you signals that it’s time to go.

When you have a quarter of your portfolio in one name and the market starts getting noisy, getting smaller is a valid move.

The 80% Profit Target (Let the Trade Ride)

When neither the 50% Rule nor the Turbocharge Rule applies, let the trade ride.

This is the patient approach. You’ve checked your screeners, nothing compelling is available, and your thesis on the underlying is intact.

So you stay in the trade.

Set a GTC limit buy at 80% of the premium collected as your exit.

Why 80% and not 100%? Because the risk/reward flips in the last 20%.

You’re chasing a small sliver of remaining premium while exposed to a sudden move against you. The 80% target catches the bulk of the profit while getting you out before the math stops making sense.

And to be clear, letting a trade ride is an active decision, not laziness:

• You checked screeners
• You evaluated alternatives
• You decided that staying in this trade was the best use of your capital right now

The patient ones rarely get the glory, but they do tend to get the returns.

The 80% Profit Target in Action

Here is an example on B (Barrick Mining) trade where I let the position ride:

• B put, $42 strike, 2 contracts
• Sold (STO) at $1.00
• Closed (BTC) at $0.15
• Held for 18 days
• $170 total profit ($85 per contract)
• 85% premium captured (% Gain)
• 2.02% ROC
• 41.04% annualized yield

Compare this to the CLS trade earlier:

• Lower annualized yield (41.04% vs. 64.24%)
• Higher % Gain (85% vs. 26.23%)
• Higher ROC per cycle (2.02% vs. 1.41%)

I captured more premium because I was patient. There was no rush. No better trade on the board. So I let theta do its job.

This is the trade that doesn’t make for an exciting story. And that’s exactly the point.

Why None of This Matters Without a Better Trade

Most people close early because it feels good, not because it is good.

(Yes, I’ve made this mistake too.)

There’s a dopamine hit to closing a winner. You see green, you lock it in, you feel productive.

There’s also the loss aversion factor too. We’ve all had trades that made an early paper profit, but we kept the position open, giving back all (or more) of the profit.

Loss aversion the most powerful force in all of trading and investing. It hurts to lose money more than it feels good to make money.

So, we close early.

But then what? Your capital sits in cash earning nothing while you wait for the next setup.

Closing Early Increases Annualized Yield But Decreases Absolute ROC

A fast exit looks spectacular on an annualized basis. But if the ROC is so small it barely moves your account… what was the point?

(Hint: There was no point.)

Don’t misunderstand me. Closing early is often the right call. But only when you have somewhere better to deploy the capital.

And, sometimes the “better use” isn’t a new trade at all.

Remember the CLS example above? I had $25,000 in one position. The macro picture was shifting. I closed not because I found a better trade, but because reducing exposure was the better use of my capital.

Derisking counts. Idle cash by choice is a valid position.

Idle cash by accident (because you closed early with no plan) is the mistake.

For the full breakdown on how ROC and annualized yield work together, see How to Calculate Return on Capital and How to Calculate Annual Yield.

My Partial Profit Decision Framework

Above is a quick reference for all three techniques.

Before applying any of the three techniques, ask yourself one question:

Are there better trades available?

Check your stock screener, then check your options screener. Then decide.

Close early when:

• Your screeners show a trade with higher ROC and comparable risk
• You can immediately redeploy the freed capital
• The replacement trade has a clear destination (not “I’ll find something later”)

Hold when:

• No compelling trades are available
• Your underlying thesis on the stock is intact
• No major changes in the broader market
• The remaining premium justifies the remaining time

If you exit early with no other trade to deploy to, you’ve lowered your ROC and now your cash is sitting idle. That’s not a strategy. That’s either a dopamine hit or loss aversion.

Here’s how I actually think through this.

Scenario A (Compelling Trade Exists)

Let’s suppose there is a better use of our capital:

• You sold a CSP, $50 strike, collected $2.00 ($200 premium), 30 DTE
• After 6 days the option is at $1.10, you’re up 45% (Turbocharge Rule applies)
• You check screeners and find a CSP at $35 strike, collecting $1.50 premium, 30 DTE
• That’s 4.29% ROC (52.14% annualized)
• You close the current position, lock in $90 profit (0.18% ROC on 6 days)
• Redeploy $5K into the new trade
• The new trade alone delivers more ROC than the remaining $110 premium would have

Close. Redeploy. The math supports it.

Scenario B (Nothing Compelling)

Now let’s suppose there isn’t a better option (pun intended):

• Same setup: $50 strike, $2.00 premium, 30 DTE, option at $1.10 after 6 days
• Best available trade on screeners: 0.8% ROC over 35 days (8.34% annualized)
• Not worth it
• Current position still has $110 premium left over 24 days
• Hold, ride it out, collect full $200 (0.40% ROC over 30 days, 4.87% annualized)
• The “better” trade isn’t better enough to justify exiting

Hold. Let theta do its work.

Common Mistakes When Taking Partial Profits on Cash Secured Puts

I’ve made every single one of these. Consider this your shortcut.

Closing Early With No Plan For the Capital

This is the caveat in action. You close the winner, feel great for five minutes, then realize you have nowhere to put the money.

Your cash sits idle. Your ROC drops. You would have been better off holding.

Chasing the Last 10-20% of Premium When Risk/Reward Has Flipped

The opposite mistake. You’ve captured 80% of the premium but you want all of it. That last sliver isn’t worth the risk of a sudden move against you in the final days.

Set the 80% target and walk away.

Applying the Rules Mechanically Without Checking Screeners

The 50% Rule says close at 50%. But if you close at 50% and there’s nothing better to deploy into, you’ve followed the rule and missed the point.

The rule is the starting condition, not the decision.

Emotional Closing (Taking Profits Because of Anxiety)

Your position dips from +40% to +25% and panic sets in. You close to “protect” the profit.

But the position is still solidly profitable, your thesis is intact, and you have no replacement trade. That’s fear and loss aversion driving the exit, not your framework.

Partial Profits Are a Skill, Not a Formula

You now have three partial profit techniques and a decision framework for choosing between them. That’s more structure than most traders ever build around their exits.

The techniques are simple. Knowing when to use them is the skill.