About the Cash-Secured Put Calculator
Selling a cash-secured put means writing a put option while setting aside enough cash to buy the shares at the strike price if you are assigned. You collect the premium up front; if the stock stays above the strike you keep it, and if it falls below you buy 100 shares per contract at the strike, with the premium lowering your effective cost. This cash-secured put calculator shows the return on the cash you tie up, the same return annualized, and what the trade looks like if you end up owning the stock.
It is built for income investors and for people who want to buy a stock they like at a lower price than today’s quote. Compare strikes and expirations by their annualized return, check the discount the effective purchase price gives you versus the current price, and see the maximum loss if the stock goes to zero. You can also include the interest your collateral earns in a money market or T-bill sweep while the put is open.
Returns are measured against the full collateral (strike × 100 shares per contract) and annualized with simple scaling (× 365 ÷ days). Commissions, early assignment and taxes are not included.
With the default inputs, the premium return on collateral is 2.53%. Change any value above to recalculate instantly.
How to use the cash-secured put calculator
- 1Enter the current stock price and the strike of the put you plan to sell.
- 2Enter the premium per share (the option quote, not the contract total).
- 3Enter the days to expiration and the number of contracts.
- 4Optionally enter the interest rate your cash collateral earns.
- 5Compare the annualized return and effective buy price across strikes.
Formula and method
The cash you must hold is the strike price times 100 shares for each contract. The premium return divides the premium per share by the strike, which is the same as total premium ÷ total collateral. The annualized figure scales that period return by 365 ÷ days to expiration without compounding, so trades of different lengths can be compared.
If the stock finishes below the strike you are assigned and buy the shares at the strike, but the premium you kept lowers your effective cost to K − P, which is also the breakeven at expiration. The maximum loss assumes the stock falls to zero. Interest on collateral is simple interest at the rate you enter for the days the put is open.
- K
- Put strike price
- P
- Premium received per share
- days
- Calendar days to expiration
Worked examples
$47.50 put on a $50 stock for $1.20, 30 days
One contract ties up $4,750 of cash and pays $120, a 2.53% return in 30 days — about 30.7% annualized. If assigned you buy the shares at an effective $46.30, 7.4% below today’s price. The collateral earning 4% adds $15.62, lifting the total return to 2.86%.
Two contracts on a $180 stock, $170 strike, 45 days
Two contracts require $34,000 of collateral and bring in $680, a 2% premium return (16.2% annualized). Interest of $188.63 at 4.5% raises the annualized return to about 20.7%. Your effective buy price if assigned is $166.60.
At-the-money 21-day put, 5 contracts
Selling five at-the-money $25 puts for $1.10 collects $550 on $12,500 of collateral, a 4.4% return in three weeks. The high annualized figure (76%) reflects the higher chance of assignment: breakeven is $23.90, and the worst case is an $11,950 loss.
Frequently asked questions
What is a cash-secured put?+
It is a short put option backed by enough cash to buy the shares at the strike price if you are assigned. You earn the premium in exchange for the obligation to buy 100 shares per contract at the strike before or at expiration.
How do you calculate the return on a cash-secured put?+
Divide the premium by the cash required: premium per share ÷ strike price. A $1.20 premium on a $47.50 strike is 2.53%. Multiply by 365 ÷ days to expiration for a simple annualized return.
What is the breakeven on a cash-secured put?+
Breakeven at expiration is the strike minus the premium. Below that price you lose money on the shares you are assigned, dollar for dollar, just like owning the stock, though your loss is smaller than if you had bought at today’s price.
Is selling cash-secured puts risky?+
The maximum loss is large: if the stock collapses you must still buy at the strike, so the risk is similar to owning the shares, offset only by the premium. Upside is limited to the premium, so sell puts only on stocks you are happy to own at the strike.
Should I calculate the return on the strike or on strike minus premium?+
Brokers usually require the full strike amount as collateral, so this calculator uses the strike. Some traders divide by strike minus premium because the premium is credited to the account; that gives a slightly higher figure.
What happens if I am assigned early?+
American-style equity puts can be exercised at any time, usually when deep in the money near expiration or before an ex-dividend date. You buy the shares at the strike early and keep the premium; many traders then sell covered calls on the shares (the "wheel" strategy).
Results are estimates for educational purposes and are not financial advice. Rates, fees and terms vary — confirm with your lender or a licensed advisor before making decisions.