Strategy For Selling Puts: Credit Suisse Exec

The sentiment of most people continues to be one of uncertainty about the overall financial environment. This has caused many investors to trade in a different manner then they did prior to 2008.

"My clients have a lot of money in cash and fixed income securities. I wanted to try to get them to put more money into some core equities—especially large dividend producing equities," Dagny Maidman, managing director of private banking USA at Credit Suisse Securities, told CNBC's "The Strategy Session" on Wednesday.

"This is very hard because they understand that the core equities will have volatility, even if they are getting a 3 percent dividend," Maidman said.

"I was able to formulate a list of stocks, which the clients are comfortable with. Then we can get up to a 10-11 percent premium just by selling the puts," Maidman went on to say.

  • A put is an option contract giving the owner the right, but not obligation, to sell a specified amount of an underlying asset at a set price within a specified time.

"If the market really goes down a lot or one stock exceptionally goes down then clients are going to buy that stock. That will begin building out a core portfolio of stocks and reallocate them from cash and fixed incometo stocks," the Credit Suisse exec said.

Maidman also points out that where clients are located changes how they feel about the macro uncertainty picture.

Take San Francisco, California for example: "There are great companies there and I think employment has approved—certainly in the technology sector. There are a lot of great consumer gadgets and a lot of excitement around that. There are great games and companies taking big real estate," she said.

But if you go to the "central valley of California you get a really different story," Maidman said, adding, "so depending on where a client is, I'm finding they have a very different perception of what's going on."