In September 2023, Terramatris experimented with selling very short-dated cash-secured put options on Ethereum. While the portfolio gained 6.63% during the week, the more important takeaway was not the return itself but what the strategy revealed about short-duration options selling.
At the time, the fund was still in its early stages, and position sizes were small. This allowed us to test different approaches to premium collection while maintaining a strong focus on capital preservation and risk management.
If you are new to put selling, start with our guide: How to Generate Income With Ethereum Cash-Secured Puts.
What Are 1DTE Cash-Secured Puts?
1DTE stands for "one day to expiration." These options expire within 24 hours, making them among the shortest-duration contracts available in the options market.
A cash-secured put involves selling a put option while maintaining sufficient capital to purchase Ethereum if assignment occurs.
Unlike speculative option buying, cash-secured put sellers generally want one of two outcomes:
- The option expires worthless and they keep the premium.
- The option is assigned and they acquire Ethereum at a lower effective purchase price.
Because of this, cash-secured puts are often used by long-term investors seeking to accumulate ETH while generating additional income.
Why We Experimented With 1DTE Options
During this period, Ethereum was trading in a relatively narrow range near $1,650. Volatility was subdued, and market direction remained uncertain.
Rather than making aggressive directional bets, we chose to focus on collecting small amounts of option premium through very short-duration contracts.
These trades often generated only a few cents per contract, but they allowed us to repeatedly harvest time decay while limiting exposure to long-term market uncertainty.
The goal was simple: generate small, repeatable gains while preserving capital.
The Appeal of Short-Duration Premium Selling
One reason many option sellers are attracted to 1DTE contracts is the speed of time decay.
As expiration approaches, option value can decline rapidly, benefiting option sellers if the underlying asset remains stable.
Potential advantages include:
- Rapid premium collection
- Frequent opportunities to redeploy capital
- Reduced exposure to long-term market movements
- More flexibility when adjusting positions
However, these benefits come with important trade-offs.
The Risks of 1DTE Put Selling
Although short-duration options reduce exposure time, they are not necessarily low-risk.
In fact, very short-dated options can become highly sensitive to sudden market movements.
Key risks include:
- Sharp overnight price moves
- Unexpected volatility spikes
- Assignment risk
- Higher transaction frequency
- Limited time available for adjustments
For this reason, position sizing remains critical.
Even strategies that appear conservative can become dangerous if position sizes grow too large relative to available capital.
What We Learned From This Experiment
Looking back, the most valuable lesson was not the weekly gain itself.
The experiment reinforced several principles that continue to influence our Ethereum options approach today:
- Small gains can compound over time.
- Consistency matters more than individual trades.
- Risk management is more important than maximizing yield.
- Cash-secured puts can be an effective accumulation strategy.
- Patience often outperforms prediction.
The strategy worked well because market conditions were relatively calm. Different volatility environments would likely produce different results.
1DTE vs Longer-Dated Cash-Secured Puts
As our options framework evolved, we gradually expanded beyond ultra-short-duration positions.
Longer-dated cash-secured puts often offer:
- Larger premium collection per trade
- More flexibility for adjustments
- Better strike selection opportunities
- Less trading activity
Short-dated options remain useful, but they are just one tool within a broader options strategy.
How This Fits Into a Long-Term Ethereum Strategy
Today we view cash-secured puts primarily as an Ethereum accumulation strategy rather than simply an income strategy.
Instead of placing passive limit orders, investors can potentially collect option premium while waiting to buy Ethereum at predetermined prices.
This approach aligns naturally with long-term investors who already intend to build ETH positions over time.
Many investors who are assigned on short puts later transition into covered calls, creating a systematic income process known as the Wheel Strategy.
Final Thoughts
This early 1DTE experiment demonstrated that even very small option premiums can contribute to portfolio growth when combined with disciplined execution and risk management.
The 6.63% weekly gain was encouraging, but the real lesson was that successful options trading is often built on consistency rather than dramatic wins.
Cash-secured puts remain one of the most practical Ethereum options strategies because they combine premium generation with long-term accumulation goals.
For investors who already want to own Ethereum, getting paid while waiting can be an attractive alternative to placing traditional limit orders.
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