Cash-Secured Put Calculator
Run the numbers on a cash-secured put: sell a put on a stock you would be happy to own, holding enough cash to buy the shares if assigned. This tool shows the premium yield, the annualized return on the capital at risk, and your breakeven (the effective price you would pay if assigned).
How it works
A cash-secured put (CSP) is selling a put while holding
strike × 100 in cash per contract, so you can buy the shares if the option
is assigned. You keep the premium either way; if you are assigned, your effective
purchase price is the strike minus the premium you collected.
What income traders actually compare is the annualized return on the capital at risk, because a 3% premium over 30 days is very different from 3% over 90 days. The calculator annualizes on a simple 365-day basis. It is the same exact engine as the covered-call calculator; sell puts, get assigned, then sell covered calls and you are running the wheel.
Worked example
Sell the $50 put for $1.50, 30 days out, one contract:
- Cash secured = 50 × 100 = $5,000; premium income = $150.
- Premium yield = 1.50 / 50 = 3.0% → annualized 3% × 365/30 = 36.5%.
- Effective buy price if assigned = 50 − 1.50 = $48.50 (your breakeven).
The formula
cash secured = strike × 100 × contracts premium income = premium × 100 × contracts premium yield = premium / strike effective price = strike − premium (your breakeven if assigned) annualized = premium yield × 365 / days
Annualized figures are simple (×365/days), not compounded, so they are comparable across trade lengths but not a guaranteed yearly return.
FAQ
- What is a cash-secured put?
- Selling a put option while holding enough cash (strike × 100 per contract) to buy the shares if you are assigned. You collect the premium for taking on the obligation to buy at the strike.
- How is the annualized return calculated?
- Premium ÷ strike gives the period yield on the cash at risk; multiplying by 365 ÷ days annualizes it so you can compare puts of different lengths.
- What happens if my cash-secured put is assigned?
- You buy 100 shares per contract at the strike, but your effective cost is the strike minus the premium you collected. Many traders then sell covered calls against the shares — that loop is the wheel strategy.
- Is selling cash-secured puts safe?
- The premium is only a small buffer. If the stock falls well below the strike you still buy at the strike and hold the loss, just as if you had bought the shares outright. A CSP is an income strategy, not downside protection.