Selling cash secured puts can be done for a variety of reasons and across a wide spread of time frames. Some folks sell puts far out-of-the-money simply to obtain income. Others sell them with the full intention to acquire the stock cheaper - and be paid to do it.
If income is your only goal, then selling far out-of-the-money puts with a month or less to go until expiration makes good sense. On the other hand, if you are in no hurry and want to by an issue you want to own - but at a much cheaper price - then perhaps selling options several months out can make sense. Consider selling front-month at-the-money puts on your favorite blue chips when they are temporarily beaten-down in price.
Consider Celeste's case: She has accumulated $20,000 in her brokerage account. XYZ is currently at $10/share. She has been eyeing the options tables for XYZ and sees that she can sell next month’s $5.00 strike-price XYZ put for $0.25. Because she has $20,000 in idle cash she can afford to sell up to 40 puts. She has noticed that XYZ has stayed in a range above $5/share for the last two years. She likes her odds on this strike price and decides to sell 10 contacts of next month’s XYZ 5’s, using one-quarter of her idle cash to secure this put sale.
Let's do the math:
So you see, this can be a lucrative technique to learn and use!
Additional Resources: Cash secured put writing is a commonly used options strategy. You can read about it from many other sources. I can recommend the following link for more information:
"You are never too old to set another goal or to dream a new dream".
-C. S. Lewis