I realized I didn't reply specifically to your question about why $PUTW ticker price looks the way it does.
"The strategy is designed to receive a premium from the option buyer by selling a sequence of one-month, at-the-money, S&P 500 Index puts (SPX puts). If, however, the value of the S&P 500 Index falls below the SPX Put’s strike price, the option finishes in-the-money and the Fund pays the buyer the difference between the strike price and the value of the S&P 500 Index." [1]
They aren't selling puts to open a position, they're selling SPX puts. SPX is a cash-settled, European-style option derivative product tracking the S&P index at a notional value of $100 per index point. When they get assigned because their position closes in the money, they write a check, instead of taking delivery of shares they bought at a discount and waiting for a recovery.
So what this ETF tracks is basically the spread between realized and implied volatility. When the implied volatility is higher than the realized volatility -- which is most of the time -- it tends to be a little bit lower. When the realized volatility is higher than the implied volatility -- which tends to only happen during dramatic market moves -- it tends to be a lot higher.
If you zoom out, they basically go up nice and smooth, until a major market event hits, then they get practically wiped out. Then they start recovering again.
If you sell puts with the goal of getting assigned on the underlying, and riding it back up, you actually want to get assigned at some point. These folks instead cut a check for their losses, don't take delivery of anything they bought at a discount, and start selling premium again, hoping the premium will make up for their losses. Doesn't look like a winning strategy huh?
tl;dr: $PUTW does not use the strategy I suggest. Did that address your question?
To clarify, using put sells to enter into a position that you would otherwise have opened, today, to hold long-term with a is generally better than a market or limit order. As an income-generation strategy, selling put options is, on average, a moneymaker so long as realized volatility remains lower than implied volatility. That is typically the case, but of course, March flipped that on its head, and there's no "one" strategy.
If you would have otherwise bought 100 shares of SPY on Friday, it would cost you $326.52 (x100, so $32650). If you sell 1 put option expiring 8/31 "at the money" (i.e. a $326P) you will receive a net credit of $7.20 per share today ($720).
That money is yours at the moment you sell the put option, so if SPY closes at or above $326 on 8/31 (excluding early expiry), you've made $720 on $32600, or a one-month gain of 2.2%. That is an annualized return on your staked capital of 29%. You can then keep making an annualized 29% return every month until you get assigned (assuming IV rank remains stable).
Alternatively, if SPY closes below $326, you've actually bought it for a $7.72 per share discount ($7.20 + $0.56), or $318.80 over what it's trading at right now. As you plan to buy and hold for the long run, you got a much better entry price than you would have with a market order.
If you're planning to buy and hold today, it's hard to lose with selling a put to open. You either collect a nice premium, or you buy the shares at a discount. If your goal is to own the shares long term, you're feeling good either way. Make sense?
What you could theoretically miss out on is a big run up from the moment you bought the shares in excess of the premium.
You can get more aggressive too, and sell puts you don't think you'll get assigned on, at the highest price you'd be willing to pay for SPY and play the long game. Sell $300 8/31 puts for $2. There's a 80% chance you'll keep that premium, and it's an annualized 8.2% return on staked capital. Then if you get assigned it's actually a $28/share discount -- 8.5% -- below today's price.
$PUTW is an ETF that implements the strategy and it has not done well in recent years.