The figure above clearly divides the intent of these two by separating the primary from the secondary goals. The main difference between the two is that the first one is more like an investing approach while the second one is purely trading activity. Make sure to identify your investing/trading style prior to writing puts.

Besides these (black and white, or investing versus trading) put writing approaches, we can also use a third approach which basically mixes the two. With this approach, the basic assumption is still the same - we truly want to own the stock shares.

For educational purposes only, Disney stock has been selected. The daily chart shows the stock at the time of writing losing 3.67% and bouncing off its strong demand zone (DZ) around 33-ish. The last candle's tail has not gone below 33 as of yet; therefore, selling the 33 cash secured put would make sense.

 

Looking at DIS with strictly put writing eyes, one could design a trade in the following way. With Disney trading above 33 and the sale of the (at-the-money or near-the-money) November ATM 33 puts for a credit of 1.10, this would give the seller an obligation to buy the stock at 33 if it is below this at expiry. If assigned, the actual cost basis of the stock would be 31.90 (33 ñ 1.10). In such case, Figure 3 shows the goals for the two players. If the trader is assigned the stock, they can then sell calls against it, hold the stock if they are bullish, or simply close the stock position.

Here is what goes through the minds of each of them. The investor likes the stock, but finds the current stock price a bit too high, so he or she sells the put to reduce the price of the entry. Meanwhile, the trader looks at the chart and does his/her technical analysis. From this they determine that the stock has a solid level of support at the 33-ish area and they have the full conviction that this demand zone will hold, so they sell the shortest possible time (Nov 33p) for a premium of 1.10.

In conclusion, writing puts is viewed by some as an investing strategy and by others as a trading strategy. You can use it for either or both: Same strategy, different mindset.