What is a cash-secured put, in plain words?
A cash-secured put is selling (writing) a put while setting aside enough cash to buy the shares if it is exercised 1. You keep the premium either way; if the stock ends below the strike you also normally buy 100 shares at it 1. The most it can make is the premium; it breaks even at the strike minus the premium, and the most it can lose, if the stock fell to nothing, is the strike minus the premium 1.
A $48 put with 30 days left sold at 30% implied volatility on a $50 stock (made-up numbers), with $4,800 set aside. Move where the stock ends at expiry.
In numbers
By the formula the put sells for $0.81 a share 2, $81 a contract. Above $48 at expiry you keep that; below it you buy the shares at $48, so the trade loses below $47.19, and at worst $4,719 a contract 1.
Why the cash matters
The cash makes sure the shares can be paid for if the put is exercised 1. It doesn't make the loss smaller: at expiry the result is the same as owning the shares from $47.19, without the rise above $48, and both lose if the stock falls toward nothing 1.
What this shows, and what it doesn't
The result at expiry, before fees. The put can be exercised before expiry, on any day the market is open 3, and brokers set their own rules for selling options.
Go further
Sources (3), checked 20 October 2026 and 27 October 2026
- Montréal Exchange, “Cash-Secured Put” (equity options strategy sheet). Read it (read 27 October 2026)
- Fischer Black and Myron Scholes, “The Pricing of Options and Corporate Liabilities”, Journal of Political Economy 81(3), 637–654, 1973. Read it (read 20 October 2026)
- FINRA, “Trading Options: Understanding Assignment” (14 December 2020). Read it (read 27 October 2026)
Now try it on a scenario of your own
Pick where a simulated stock might be, and by when: drag one dot and see, side by side, what buying shares, one option, or a pair of options (a call or put spread) would each do. Free, no sign-up.
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