I've been thinking about selling puts as a 'safe' way to make money in this trending down market.  Here is the process I following to come up with a list of trade possibilities:

First, I used the Options Scanner to search for Expensive, OTM, Short Term PUTS, with at least moderate liquidity.  Expensive because I want to be well paid to sell them, OTM because I want to have a good chance for them to expire worthless, Short Term because I have no idea what the market is going to do long term.

This gave me a list of options.  I then filtered that list based on the long term quality of the company.  You could use the Research Reports feature to do that.  I used a different service.

Then I used the probability calculator to exclude any trades where the strike price of the option is closer that 1 standard deviation to the current price.  Why?  Because the safest way for me to profit is for the option to expire worthless. 

I then sorted the list of options is Excel based on the option price / underlying stock price.   Why?  Since these are cash secured PUTS, and I hope to profit by having the options expire worthless, I want the biggest bang for each dollar that is sittlng idle, in case I have to purchase the stock.

So tomorrow, I am going to put in limit orders for the following options:

 NILE FEB 45 PUT (1.63%)

 DSX FEB 25 PUT (1.43%)

I should point out that the percentage figures are for holding the position just 5 days.  I'd love to hear any comments on sell PUTS in general, and on how I'm using TradeKing tools to find candidates for this strategy.  Thanks! 

Thanks for the advice, Snowman.

Another potential problem with both of these trades is that they both report earnings this week.  In fact, that's probably part of the reason that the premium is high on these puts. 

So the proposition is that the earnings report for NILE is either postive, or not so bad that it causes a 16% drop in the stock price this week.   I'll think about it tonight.  Thanks.