Cash-Secured Put Calculator

Stock + OptionbullishDefined Risk

Sell puts with cash reserved to buy stock, collecting premium while waiting.

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What Is a Cash-Secured Put?

A cash-secured put is a short put where you set aside enough cash to buy 100 shares at the strike price if assigned. You sell an out-of-the-money put, collect the premium, and wait. If the stock stays above the strike, the put expires worthless and you keep the premium. If it falls below, you buy the shares at the strike with the cash you reserved, and the premium reduces your effective purchase price.

The strategy is mildly bullish. You are betting the stock will not fall far, and you are also expressing willingness to own it at a discount. Time decay works in your favor every day, and falling implied volatility helps too because it shrinks the value of the put you sold. The maximum profit is the premium, so the trade wins small and often but can lose large when the stock drops sharply.

The payoff diagram is flat at the premium above the strike, then slopes down one for one below it. Because the loss is bounded by the stock going to zero, and because the cash is already reserved, the cash-secured put is considered defined risk. It has the same payoff as a covered call at the same strike, which is why the two are often paired in the wheel strategy.

Setup

SELL1x OTM1 PUT

Max Profit

Premium received

Max Loss

Strike price - premium (assigned and stock goes to $0)

Breakeven

Strike price - premium received

Cash-Secured Put Example

XYZ trades at $100 with 30 days to expiration. You sell one $95 put for $2.00, collecting $200, and set aside $9,500 in cash to cover potential assignment. Your net outlay if assigned would be $9,300, an effective purchase price of $93 per share.

Stock at expiration	Result
$100 (unchanged)	The put expires worthless. You keep the full $200 credit, the maximum profit, and the $9,500 is released.
$93	Breakeven. The put is $2.00 in the money, so you are assigned 100 shares at $95 that are worth $93, a $200 unrealized loss exactly offset by the $200 credit. P&L is $0.
$90	You are assigned 100 shares at $95 that are worth $90, a $500 unrealized loss, reduced by the $200 credit to a net loss of $300.
$80	You are assigned at $95 with shares worth $80, a $1,500 unrealized loss, reduced by the $200 credit to a net loss of $1,300.

Maximum profit is the $200 premium if XYZ finishes at or above $95. Breakeven is $93. Maximum loss is $9,300 ($95 strike minus $2.00 premium, times 100) if the stock goes to zero after assignment.

When to Use a Cash-Secured Put

You want to buy a stock but think the current price is a little high, and you would be happy to own it at the strike.
You expect the stock to trade flat or rise over the next one to two months, so the put is likely to expire worthless.
Implied volatility is elevated, making the premium large relative to the distance between the stock price and the strike.
You have idle cash and want to earn a return on it while waiting for a better entry price.
Typical entries use 30 to 45 days to expiration and a strike around the 20 to 30 delta, which corresponds to roughly a 70 to 80 percent probability of expiring out of the money.

Risks to Understand

A sharp decline leaves you owning shares well above the market price. The premium offsets only the first couple of dollars of the drop.
The reward-to-risk ratio is skewed. In the example you make at most $200 but could lose thousands if the stock gaps down on bad news.
Rising implied volatility inflates the value of the short put and creates a mark-to-market loss even if the stock has not moved.
Capital is tied up. The $9,500 reserved earns only the $200 premium over 30 days unless it sits in an interest-bearing account.
Early assignment is possible when the put is deep in the money, especially just before an ex-dividend date, leaving you with stock earlier than expected.

Managing the Trade

Many traders close the put once it has lost 50 to 70 percent of its value and redeploy the cash into a new put, rather than waiting for the last few cents of decay.
If the stock falls toward the strike and you still like the company, let assignment happen and begin selling covered calls against the shares.
If you no longer want the shares, roll the put down and out: buy back the current put and sell a lower strike in a later expiration, ideally for a net credit.
Avoid selling puts into earnings unless you are willing to own the stock after a large gap down.
Size positions so that being assigned on every open put would not exceed the amount of stock you actually want to hold.

Cash-Secured Put FAQs

How do you calculate the breakeven on a cash-secured put?: Breakeven is the strike price minus the premium received. If you sell a $95 put for $2.00, breakeven is $93. Below that price at expiration the position loses money, and above the strike you keep the full premium.
What happens if a cash-secured put is assigned?: You buy 100 shares at the strike price using the cash you set aside, and the premium you collected stays in your account. Your effective cost basis is the strike minus the premium. Assignment typically happens at expiration if the put finishes in the money, though it can occur early if the put is deep in the money.
Is a cash-secured put risky?: It carries the same downside as buying the stock at the strike, minus the premium. The risk is defined because the stock cannot fall below zero, and you have the cash to cover assignment. The main danger is selling puts on a stock you do not actually want to own.
How much cash do I need to sell a cash-secured put?: You need the strike price multiplied by 100, minus the premium received. For a $95 put sold at $2.00, that is $9,300 after the credit. Most brokers hold the full $9,500 as collateral until the put is closed or expires.
Is a cash-secured put the same as a covered call?: They have the same payoff profile at the same strike and expiration, which is a consequence of put-call parity. A cash-secured put profits from premium while holding cash; a covered call profits from premium while holding stock. The choice usually comes down to whether you already own shares and which side has better pricing.
What strike should I pick for a cash-secured put?: A strike 5 to 10 percent below the current price with 30 to 45 days to expiration is common, roughly the 20 to 30 delta. Pick the price at which you would genuinely be happy to buy the stock. Closer strikes pay more but are assigned more often.

Related Strategies

Covered Call Short Put (Naked Put)Bull Put Spread

What Is a Cash-Secured Put?

Cash-Secured Put Example

Stock at expiration	Result
$100 (unchanged)	The put expires worthless. You keep the full $200 credit, the maximum profit, and the $9,500 is released.
$93	Breakeven. The put is $2.00 in the money, so you are assigned 100 shares at $95 that are worth $93, a $200 unrealized loss exactly offset by the $200 credit. P&L is $0.
$90	You are assigned 100 shares at $95 that are worth $90, a $500 unrealized loss, reduced by the $200 credit to a net loss of $300.
$80	You are assigned at $95 with shares worth $80, a $1,500 unrealized loss, reduced by the $200 credit to a net loss of $1,300.

Maximum profit is the $200 premium if XYZ finishes at or above $95. Breakeven is $93. Maximum loss is $9,300 ($95 strike minus $2.00 premium, times 100) if the stock goes to zero after assignment.

When to Use a Cash-Secured Put

You want to buy a stock but think the current price is a little high, and you would be happy to own it at the strike.

You expect the stock to trade flat or rise over the next one to two months, so the put is likely to expire worthless.

Implied volatility is elevated, making the premium large relative to the distance between the stock price and the strike.

You have idle cash and want to earn a return on it while waiting for a better entry price.

Typical entries use 30 to 45 days to expiration and a strike around the 20 to 30 delta, which corresponds to roughly a 70 to 80 percent probability of expiring out of the money.

Risks to Understand

A sharp decline leaves you owning shares well above the market price. The premium offsets only the first couple of dollars of the drop.

The reward-to-risk ratio is skewed. In the example you make at most $200 but could lose thousands if the stock gaps down on bad news.

Rising implied volatility inflates the value of the short put and creates a mark-to-market loss even if the stock has not moved.

Capital is tied up. The $9,500 reserved earns only the $200 premium over 30 days unless it sits in an interest-bearing account.

Early assignment is possible when the put is deep in the money, especially just before an ex-dividend date, leaving you with stock earlier than expected.

Managing the Trade

Many traders close the put once it has lost 50 to 70 percent of its value and redeploy the cash into a new put, rather than waiting for the last few cents of decay.

If the stock falls toward the strike and you still like the company, let assignment happen and begin selling covered calls against the shares.

If you no longer want the shares, roll the put down and out: buy back the current put and sell a lower strike in a later expiration, ideally for a net credit.

Avoid selling puts into earnings unless you are willing to own the stock after a large gap down.

Size positions so that being assigned on every open put would not exceed the amount of stock you actually want to hold.

Cash-Secured Put FAQs

How do you calculate the breakeven on a cash-secured put?

Breakeven is the strike price minus the premium received. If you sell a $95 put for $2.00, breakeven is $93. Below that price at expiration the position loses money, and above the strike you keep the full premium.

What happens if a cash-secured put is assigned?

You buy 100 shares at the strike price using the cash you set aside, and the premium you collected stays in your account. Your effective cost basis is the strike minus the premium. Assignment typically happens at expiration if the put finishes in the money, though it can occur early if the put is deep in the money.

Is a cash-secured put risky?

It carries the same downside as buying the stock at the strike, minus the premium. The risk is defined because the stock cannot fall below zero, and you have the cash to cover assignment. The main danger is selling puts on a stock you do not actually want to own.

How much cash do I need to sell a cash-secured put?

You need the strike price multiplied by 100, minus the premium received. For a $95 put sold at $2.00, that is $9,300 after the credit. Most brokers hold the full $9,500 as collateral until the put is closed or expires.

Is a cash-secured put the same as a covered call?

They have the same payoff profile at the same strike and expiration, which is a consequence of put-call parity. A cash-secured put profits from premium while holding cash; a covered call profits from premium while holding stock. The choice usually comes down to whether you already own shares and which side has better pricing.

What strike should I pick for a cash-secured put?

A strike 5 to 10 percent below the current price with 30 to 45 days to expiration is common, roughly the 20 to 30 delta. Pick the price at which you would genuinely be happy to buy the stock. Closer strikes pay more but are assigned more often.