The hunt is on for more option selling opportunities.

Option selling becomes difficult as the market steadily goes up and volatility goes down. It is important to earn enough from selling the options for the amount of risk we are willing to take.

I am not willing take big risks for the sake of action. I will wait until the odds stack up and then place a trade.

Finally the stock market has pulled back brings great companies stock prices in a good range for selling options.

The opportunity today is found in the consumer discretionary sector.

This stock has pullback a respectable 7% opening up a great trade. The business remains strong.

Today's trading for income will be applied to Home Depot (HD) buy selling put options to earn a big cash payout.

The income earned reduces risk and since if the stock price falls you may have to purchase shares you should only use the strategy on companies you want to purchase.

Home Depot is a leader in building materials and home-improvement products.

With 2,300 stores across North America, where it sells goods to 1.6 billion customers each year.

Home Depot sales continue to rise and it earns a nice 9.6% profit margin. It's earnings per share is growing rapidly due to a cost discipline and stock buyback program.

With the housing market still robust more customers are flocking to Home Depot stores and spending more per capita than in recent years. This is shown in same-store sales figure which grew 6.8% last year.

The company is in great financial shape generating billions of dollars in free cash flow. This allows the company to pay a 2.1% annual dividend.

Also the company trades at a great price with an EV/EBITDA ratio of 14.4.

The chart looks great for put selling.

The chart below shows Home Depot has pulled back to within 5% of its rising 200-DMA. The 200-Day Moving Average has been very strong support and provides a nice floor for our trading strategy.

Trade details:

Sell to Open November 16, $195 puts on Home Depot for $3.90. Receive 2% payout on your purchase obligation for agreeing to buy shares at a slight discount to yesterday's closing price.

At expiration if shares are above $195: put sellers will keep the $3.90 or a 19.2% annualized return.

At expiration if shares are below $195: put sellers will buy shares at a about 4% discount to recent closing prices including option premium received.

For protection use a stop loss at $171. In the worst case scenario you would only loss about 10.5% on your cost basis. At this price Home Depot stock would have fallen below its 200-DMA and shares would likely continue to fall for some time. The name of the game is to take losses early and never suffer devastating losses.

Earn big cash payout today by selling puts on a great business.

Disclosure: I wrote this article myself, and it expresses my own opinions. I have no business relationship with any company whose stock is mentioned in this article.