Cash Secured Put Calculator

A cash secured put (or short put) involves selling a put option while holding enough cash to purchase the underlying stock if assigned. It's a neutral-to-bullish strategy that generates income through premium collection while giving you the opportunity to buy shares at a lower effective price.

Key Characteristics

• Maximum Profit: Limited to the premium received
• Maximum Loss: (Strike price − premium received) × 100 (if stock goes to $0)
• Breakeven: Strike price − premium received
• Best Used When: You like a stock and are willing to buy shares at the strike price, but want to generate income while you wait. Can also be used to accumulate additional shares if you already own the stock.

How to Read the P/L Chart

The expiration line (white) shows your profit or loss if you hold the position until expiration. For cash secured puts, profit is capped at the premium received when the stock finishes above the strike price. Losses increase as the stock falls below your breakeven.

The T+0 line (cyan) shows your theoretical P/L at the time of entry—if the stock moved to various prices on day one, this line shows your expected result. The gap between the T+0 and expiration lines represents the profit you'll earn from theta decay if the stock remains above your breakeven at expiration. Notice that the position can profit even if the stock price falls, since the breakeven is lower than the stock price at entry.

The stock comparison line shows the P/L of simply buying shares at the current stock price. This highlights the core tradeoff: if the stock rallies, you'll underperform since your profit is capped at the premium received. But at every price below your entry, the cash-secured put outperforms—your breakeven is lower, so you're in the green while the stock position is underwater. The CSP sacrifices unlimited upside for a cushion of downside protection.

Note: This tradeoff assumes an OTM or ATM put. If you sell a deep ITM put, you're essentially just buying stock—both strategies share nearly the same P/L curve until the stock rises above the strike. Try it in the calculator above to see for yourself.

Using This Calculator

1. Stock Price: Current stock price at the time of entry
2. Strike Price: The price at which you may be obligated to buy shares
3. Premium: Credit received for selling the put (option price × 100 × number of contracts for total credit)
4. Days to Expiration: Time remaining until expiration
5. Implied Volatility: The market's expectation of future price movement
6. Quantity: Quantity is negative, indicating a short put position. In options trading, short calls and puts appear as negative quantities since you sold to open. The closing trade is buying them back, which adds contracts to net your position to zero.
7. Cash Requirement: The amount of cash you need to keep available for your short put to be cash-secured—strike price × $100 × number of contracts. For example, if you short 5 contracts of the $150 put, you need $75,000 in cash in case you're assigned and must buy 500 shares at $150/share.
8. Max Return on Capital: Your max profit (total credit collected) relative to the cash requirement. If your max profit is $750 on a $75,000 cash requirement, your max return on capital is 1%. This shows the potential return on your tied-up cash for the duration of the trade.

Why Use Cash Secured Puts?

• Income Generation: Collect premium upfront, even if the stock doesn't move
• Lower Entry Price: If assigned, your effective cost basis is the strike minus the premium received—lower than if you had simply bought the stock when entering the CSP
• Time Decay Advantage: Theta works in your favor as the option seller
• High Probability: Selling out-of-the-money puts means you profit in most scenarios—stock up, flat, or even slightly down
• Less Risky Than Buying Stock: Since your breakeven price is lower than the stock price at entry, selling a cash-secured put carries less downside risk than buying 100 shares outright