Shorter-Dated Options Generate the Highest Annualized Returns – June 29, 2026
When selling cash-secured puts (or covered calls), large dollar premiums are enticing. Is a $17.00 premium better than an $11.00 premium? How about is a $20.00 premium better than that $17.00 premium? Before you answer “yes, of course”, don’t forget to factor in the time to expiration. Typically, shorter-dated options generate the highest annualized returns. In this article, a real-life example with Invesco QQQ Trust (Nasdaq: QQQ) will be analyzed to confirm this principle.
Real-life example with QQQ
- 2/6/2026: QQQ trading at 602.28
- 2/6/2026: The 3/13/2026 $590.00 put shows a bid price of $11.71
- 2/6/2026: The 4/17/2026 $590.00 put shows a bid price of $17.10
- 2/6/2026: The 5/15/2026 $590.00 put shows a bid price of $20.67
- Are these listed worst-to-best or best-to-worst? Let’s see.
QQQ put calculations using the BCI Trade Management Calculator (TMC)
- Red oval: Days-to-expiration (DTE) for each contract
- Yellow field: Breakeven (BE) price points: larger premiums have the lowest BE prices
- Brown field: Initial returns: Shorter dated options have the lowest initial returns, before annualizing
- Pink field: Initial annualized returns: Shorter-dated options typically have the highest annualized returns