Strategy lesson · Basic · bullish
Cash Secured Put Explained
Sell a put while reserving cash to buy 100 shares if assigned — income strategy with a bullish-to-neutral bias.
How a Cash Secured Put is built
Sell 1 put; hold cash ≈ strike × 100 per contract (broker cash-secured requirement).
- Leg 1: sell put · strike template 95 · premium ~2 · 1 contract(s)
Risk & reward snapshot
| Market bias | bullish |
|---|---|
| Max profit | Limited to the premium received. |
| Max loss | Large if stock collapses (you may buy shares well above market). |
| Breakeven | Strike − premium received (at expiration). |
Figures are conceptual for the classic structure. Your actual premiums, strikes, and fees change the numbers — confirm on the calculator.
When traders use it
- You want income and/or are happy to own the stock at an effective discount (strike − premium).
- You are bullish to neutral and avoid naked undefined margin structures.
Key risks
- Assignment into a falling stock concentrates risk in shares.
- Opportunity cost of cash locked as collateral.
Practical tips
- Only sell puts on names you want to own.
- Ladder strikes/expirations rather than concentrating all cash on one short put.
Practice on the calculator
- Open the Cash Secured Put calculator.
- Load a symbol and option chain; fill realistic mid premiums.
- Review max profit, max loss, breakevens, and the date × price heatmap.
- Change strikes and DTE to see how risk shape shifts.
FAQ
What is a Cash Secured Put?
Sell a put while reserving cash to buy 100 shares if assigned — income strategy with a bullish-to-neutral bias.
What is the max loss on a Cash Secured Put?
Large if stock collapses (you may buy shares well above market).
When should I use a Cash Secured Put?
You want income and/or are happy to own the stock at an effective discount (strike − premium). You are bullish to neutral and avoid naked undefined margin structures.