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My criteria for considering selling naked puts are: A decent cushion between the current stock price and break-even price of the trade (5-10% of the stock price). Premium collected ÷ (100% cash secured amount – premium) yields annualized returns > 50%. No major events (i.e. earnings) expected prior to expiration. Most importantly, only consider companies that I'd be happy owning. The 4th rule gives me the security of knowing I won't feel forced to liquidate immediately, should the puts be exercised. Rather, I'm content holding the stock and selling OTM calls against it until the stock is called, or until my investment outlook changes. My trade idea: STO HIMX March 13 put for $0.60 Current stock price: $13.50 Himax is a Taiwanese company that manufactures display drivers for LCD screens (best positioned in lower-end smartphones, which is likely the best place to be in the smart phone realm right now) as well as LCOS micro-displays (Google Glass). I've been very fortunate to have followed this company for the past year, and bought stock shortly after it hit my radar at ~$5. The stock has been range-bound at $13–$15 for the last few months, and, as the upside for my stock stake has decreased, I'm looking to capitalize on this trading range. Here's how it fares against my criteria: Break-even is $12.40, 8.2% below the current stock price. 0.60 / (13.00 - 0.60) = 4.8% return for a 24 day holding period (74% annualized). Calculating return based on the margin requirement produces a return of 24%, or 365% annualized. No earnings event, and developments relating to the success or failure of Google Glass are likely a ways down the road. Having owned it for the better part of the past year, HIMX passes this criteria, as well. So, that's my idea. While supplying the LCOS displays for Glass has grabbed all the headlines for Himax recently, and created this opportunity by driving option volatility higher, it's only a piece of the Himax story. In the absence of a sharp market correction in the next 3 weeks, I feel this is a fairly safe trade.