Cash-Secured Put Calculator
Sell puts with cash collateral. See premium income, cash required, breakeven price, and return on capital.
Sell a put option while keeping enough cash to buy the shares if assigned. Collect premium income with a defined risk. If the stock stays above the strike, you keep the full premium.
How to Calculate Cash-Secured Put Returns
A cash-secured put means selling a put option while holding enough cash in your account to buy 100 shares if assigned. You collect the premium upfront. If the stock stays above the strike, the put expires worthless and you keep the premium as pure profit. If it drops below the strike, you're assigned the shares at the strike price — but your effective purchase price is the strike minus the premium received.
This strategy is popular among value investors who want to get paid to wait for a stock to reach their buy price. Instead of setting a limit buy order and getting nothing while you wait, you sell puts and collect income. If the stock drops to your target, you buy it at an even better price thanks to the premium. If it doesn't drop, you pocket the premium.
The calculator shows premium income, cash required for collateral, breakeven price, return on capital per cycle, and the P&L chart. Return on capital is the key metric — it tells you what annual yield you're earning on your cash while waiting.
Formula
Premium Received = Put Premium × Contracts × 100. Cash Required = Strike × Contracts × 100. Breakeven = Strike − Premium. Return on Capital = Premium ÷ Cash Required × 100.
Example
You want to buy AMZN but think $180 is too high. You'd buy at $170. You sell the $170 put for $4.00 with 30 days to expiration.
Premium received: $4.00 × 100 = $400. Cash required: $170 × 100 = $17,000. Breakeven: $170 − $4 = $166. Return on capital: $400 ÷ $17,000 = 2.35% per month. Annualized: 28.2%. If AMZN stays above $170, you keep $400 and repeat. If it drops to $170, you buy at an effective price of $166 — below your target.
Frequently Asked Questions
What's the difference between a cash-secured put and a naked put?
The strategy is identical — both are short puts. The difference is collateral. A cash-secured put means you have the full cash to buy the shares if assigned. A naked put uses margin and may not have full collateral. Most brokerages require cash-secured puts in retirement accounts (IRAs) and allow naked puts only in margin accounts.
How far out-of-the-money should I sell puts?
It depends on your goal. Selling ATM or slightly OTM (2-5% below current price) maximizes premium but has a higher assignment probability. Selling 10-15% OTM gives you a larger safety margin but less premium. Most cash-secured put writers sell at strikes they'd be happy buying the stock at — the premium is a bonus.
Can I combine cash-secured puts with covered calls?
Yes — this is called the wheel strategy. Sell cash-secured puts until assigned, then sell covered calls on the assigned shares until called away, then repeat. The wheel generates income in both directions. We have a dedicated wheel strategy calculator for modeling the full cycle.
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Disclaimer: This calculator is for educational purposes only and does not constitute financial advice. Trading involves substantial risk of loss. Past performance does not guarantee future results. Always do your own research and consult with a licensed financial advisor before making investment decisions.