Cash Secured Put Calculator

Cash Secured Put at a glance

How a cash secured put works

The put you sell obligates you to buy 100 shares per contract at the strike. Your broker reserves the full purchase amount, strike times 100, as collateral, so the trade is fully funded from the start. That is the defining difference from a naked short put, where only a margin deposit backs the obligation. Many investors use cash secured puts as a disciplined way to buy stock: instead of resting a limit order below the market, they sell a put at that price and collect a premium for waiting.

At expiration the payoff is flat at the full credit above the strike. Below the strike you are assigned and own the shares at the strike, but the premium lowers your net cost, so the breakeven is the strike minus the premium. The worst case is the stock going to zero. The payoff matches a naked short put exactly, yet your return is measured against the full cash reserved, so results are steadier and smaller per dollar than the leveraged version.

Before expiration, the put decays in your favor and benefits from falling implied volatility. A sharp decline raises both the put's intrinsic value and its volatility, so the position can show a paper loss well before expiration. Because the cash is already set aside, that loss cannot trigger a margin call, and you are never forced out by your broker. Depending on your broker, the reserved cash may also earn interest, which adds a little to the total return.

Cash Secured Put example with real numbers

With the stock at $100, implied volatility at 30%, a 4.1% risk free rate and no dividend, you would sell 1 97.5 put (32 days) at $2.27. That is a net credit of $227. At expiration a maximum profit of $227 and a maximum loss of $9,523, with a breakeven at $95.23. The lognormal chance of profit is 71%.

These are theoretical American option prices from the Bjerksund and Stensland model, not live quotes. Load any ticker in the cash secured put calculator above to run the same math on real market prices.

When to use a cash secured put

• You want to buy a stock you like at a price below where it trades today.
• You are genuinely comfortable owning the shares if the stock falls below the strike.
• Implied volatility is elevated, so put premiums pay well for waiting.
• You trade in an account without margin, such as many retirement accounts, where naked puts are not allowed.
• You run the wheel strategy and want the entry step before selling covered calls.

Max profit, max loss and breakeven

Maximum profit

Premium received times 100 per contract. You keep all of it if the stock closes at or above the strike at expiration, and the reserved cash is released.

Maximum loss

Strike price minus premium received, times 100, if the stock falls to zero. Because the cash is fully reserved, the loss is never amplified by leverage or margin calls.

Breakeven

Strike price minus premium received per share. This is also your effective purchase price for the shares if you are assigned.

Cash Secured Put Greeks

• Delta: Delta is positive and starts modest for an out of the money strike. It grows toward one per share as the stock falls, until the position behaves like the shares you are about to own.
• Gamma: Gamma is negative. Your stock exposure increases as the price falls, and the effect peaks near the strike in the final week.
• Theta: Theta is positive. The put's time decay is the premium you earn for waiting, and it accelerates as expiration approaches.
• Vega: Vega is negative. A drop in implied volatility after an event helps, while a volatility spike during a selloff hurts the mark to market value.

See the live numbers for your position in the Greeks tab of the calculator, or explore a single option in the options Greeks calculator.

Early exercise and assignment risk

Cash secured puts can be assigned on any business day, and deep in the money puts are the usual candidates. When a put has almost no time value left, its holder gains more by exercising now, collecting the strike in cash, and earning interest on it. For you, early assignment simply moves your purchase date forward: the reserved cash buys 100 shares per contract at the strike, you keep the premium, and no margin loan is created. Your effective purchase price is still the strike minus the premium.

Dividends change when assignment tends to happen. Put holders benefit from the stock's drop on the ex dividend date, so in the money puts are rarely exercised just before it and more often right after it, which means you usually miss that dividend. Once assigned, many traders start the second half of the wheel by selling covered calls on the new shares. If you would rather not own the stock, buy back the put before it goes deep in the money, and close before the final session to avoid pin risk.

The calculator's Early exercise risk tab flags short legs that are likely to be assigned. For a single option, use the early exercise calculator or read how early exercise and assignment work.

Pros and cons

How to manage a cash secured put

• Sell puts only on stocks you would be comfortable holding through a decline.
• Close early once most of the premium is collected, freeing the cash for the next trade.
• Roll down and out for a net credit if the stock falls and you want to delay or lower your entry price.
• If assigned, sell covered calls at or above your effective cost to continue the wheel.

Cash Secured Put FAQ

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Educational tool, not financial advice. Calculations are theoretical and depend on your inputs; real fills, fees, early assignment and dividends can change results. Options involve risk and are not suitable for every investor.