Strategy guide
Cash-secured puts: get paid to wait for your price
A cash-secured put sells someone the right to make you buy 100 shares at a chosen strike price, while you hold enough cash to cover that purchase. The premium collected is the maximum profit if the put expires worthless. Maximum loss remains substantial, since the stock can still fall most of the way toward zero after assignment.
By Option Ideas Editorial Team · Published September 1, 2026 · Updated September 2, 2026
The mechanics
You set aside strike × 100 in cash — the “secured” part. You sell one put per 100 shares you're willing to buy, below the current price. You collect the premium immediately. Two things can happen by expiration:
Stock stays above the strike
The put expires worthless. You keep the premium and never buy the stock. You can sell another put the next cycle.
Stock falls below the strike
You're assigned — you buy 100 shares at the strike, using the cash you set aside. Your effective cost is the strike minus the premium you already collected.
The numbers, precisely
- Max profit (capped)
- The premium collected, in full — if the put expires worthless, that's the entire return.
- Max loss (substantial, not capped)
- (Strike × 100) − premium, in the worst case of the stock going to $0. You're on the hook for the full strike price regardless of how far the stock actually falls.
- Breakeven
- Strike − premium per share.
- Market view
- Bullish or neutral — you're fine with the stock staying flat or rising, and genuinely willing to own it if it falls to your strike.
A worked example
Illustrative numbers, not live quotes — for that, see the ideas page, which prices cash-secured puts from a real, current option chain.
| Stock trading at | $100 |
| You sell | 1x $90 put for $2.50 premium, holding $9,000 in cash |
| If stock closes at $95 | Put expires worthless. You keep the $250, no stock bought. |
| If stock closes at $85 | Assigned 100 shares at $90. Effective cost basis: $87.50 — below today's $100, and below the $85 the stock is worth on paper only if it keeps falling further. |
| If stock closes at $40 | Assigned at $90 regardless — a $5,000 unrealized loss on shares, offset by only $250 of premium. |
When it fits, and when it doesn't
Fits
You'd be a genuinely happy buyer of the stock at the strike, and you're comfortable holding the full cash reserve until expiration — this only works as advertised on a stock you actually want.
Doesn't fit
You're selling the put purely for the premium on a stock you wouldn't otherwise want, or you can't actually afford to have that cash tied up (or the shares assigned) through a sharp decline.
Risks and assumptions
- Maximum loss is substantial, not eliminated: if the stock falls well below the strike, you're assigned at the strike regardless, and the premium only offsets a small part of the decline.
- The full cash reserve is tied up for the life of the trade, whether or not the put ends up assigned.
- Assignment can happen before expiration if the put goes deep enough in the money, handing you the shares (and the cash outlay) sooner than the calendar suggested.
FAQ
Do I need to actually want to own the stock?
Yes, genuinely -- this only works as intended on a stock you'd be a happy buyer of at the strike. Selling puts purely for premium on a stock you don't want defeats the point of the strategy.
What happens if I don't have the full cash reserved?
A broker won't let a true cash-secured put be opened without the cash (or approved margin) to cover assignment -- without it, you'd be selling a naked put instead, a different, higher-risk position.
Can I close the put before expiration?
Yes -- buying back the same put closes the position early, locking in a gain or loss without waiting to see whether assignment happens.
Primary references
Not hyperlinked deliberately -- verify current material directly on each organization's own site.
- The Options Clearing Corporation (OCC)
- Cboe Options Institute