Selling a cash-secured put is one of the most common options income strategies: you agree to buy 100 shares of a stock you like at a fixed price, on a fixed future date, and in return you collect an immediate premium. The trade works in your favor if the stock stays flat or rises, but it carries real downside if the stock collapses. This cash-secured put calculator estimates your maximum profit, maximum loss, break-even price, the cash you must set aside, and your percentage return — before you enter the order.
Enter the current stock price, the strike price of the put you are selling, the premium you receive per share, and the number of contracts. Every figure updates instantly so you can compare different strikes and expirations side by side.
How to Use
- Enter the Current Stock Price — where the underlying shares trade right now. This anchors whether your put is in-, at-, or out-of-the-money.
- Set the Strike Price — the price at which you are obligated to buy 100 shares per contract if the put is exercised. Sellers usually pick a strike below the current price (out-of-the-money) to start in profit.
- Type the Premium Received per Share — the credit you keep up front, quoted per share. A contract with a $2.50 premium actually puts $250 in your pocket, because each contract covers 100 shares.
- Enter the Number of Contracts you intend to sell. One contract equals 100 shares; selling two contracts obligates you to 200 shares and doubles every dollar figure.
- Read the result card: Max Profit is the premium you keep if the put expires worthless; Capital Required is the cash you must hold (strike × 100 × contracts); Max Loss is the worst case if the stock goes to zero; and Break-Even Price is where your gain turns into a loss.
The strategy is "cash-secured" because your broker will freeze the full purchase price of the shares — not just the risk amount — while the trade is open. Make sure the required capital matches what you would genuinely be happy paying to own the stock.
The Cash-Secured Put Math
A short put has a capped upside and a large (but finite) downside. At expiration:
- Max Profit = Premium Received — if the stock closes at or above the strike, the put expires worthless and you keep 100% of the credit.
- Max Loss = (Strike − Premium) × 100 × Contracts — if the stock crashes to $0, you still buy at the strike, but you offset that by the premium you kept.
- Break-Even = Strike − Premium — below this price you start losing money; above it you profit.
- Required Capital = Strike × 100 × Contracts — the cash your broker reserves to buy the shares.
For example, on a $150 stock you sell one 145-strike put for $2.50 per share ($250 credit). You must set aside $14,500. If the stock ends above $145, you keep the full $250 — a 1.72% return on the reserved cash over the life of the trade. If the stock falls to $0, your loss is ($145 − $2.50) × 100 = $14,250. Your break-even is $142.50: between $142.50 and $145 you are still partially profitable, below $142.50 you lose.
Why Traders Sell Cash-Secured Puts
The strategy does two jobs at once. First, it generates income today from a stock you would be willing to own anyway. Second, if the stock drops to your strike, you buy it at a net price lower than the strike — reduced by the premium. In effect, the premium is a discount on the shares you wanted.
The tradeoff is that you are exposed to a falling stock while not owning it. If the company announces bad news and gaps down, your loss accumulates quickly, and you cannot simply walk away without buying back the put at a loss. That is why position sizing matters: never sell more contracts than you can comfortably afford to take into ownership.
Examples
Example 1 — The standard income put. A trader sells one 145-strike put on a $150 stock for $2.50. Max profit is $250, required capital is $14,500, max loss is $14,250, and the break-even is $142.50. The return on capital is about 1.72% for the period until expiration.
Example 2 — A deeper out-of-the-money put on a $200 stock. Selling two 180-strike contracts for $1.20 per share collects $240 of premium. Required capital is 180 × 100 × 2 = $36,000, max loss is ($180 − $1.20) × 200 = $35,760, and break-even is $178.80. The wider gap gives up return (about 0.67%) in exchange for a lower chance of assignment.
Example 3 — No premium, no cushion. If you sell an at-the-money put with zero premium, max profit is $0, break-even equals the strike ($100), and max loss equals the full required capital ($10,000). A premium of any size is what turns this into an income strategy; selling a put for no credit offers no reward for the risk.
FAQ
What is a cash-secured put?
A cash-secured put is a short put option where you have set aside enough cash to buy 100 shares per contract at the strike price. You receive an up-front premium, and your best outcome is for the stock to stay above the strike so the option expires worthless and you keep the credit.
How is max profit calculated?
Maximum profit is the total premium you receive, because that is the most you can earn: premium per share × 100 shares per contract × number of contracts. If the put expires out-of-the-money, you keep the entire amount.
What is my maximum loss?
Maximum loss occurs if the stock goes to $0. You still must buy at the strike price, but you subtract the premium you kept. The formula is (strike price − premium per share) × 100 × contracts. It is large but not unlimited.
What is the break-even price?
Break-even is the strike price minus the premium per share. Above this price the trade is profitable; below it, the loss begins. For a 145 strike with a $2.50 premium, break-even is $142.50.
How much capital do I need?
Your broker reserves the strike price × 100 shares × number of contracts. Selling one 145-strike contract ties up $14,500 in cash. "Cash-secured" means this full amount must already be in your account.
What is a good return on capital for a cash-secured put?
A common rule of thumb targets roughly 2% of required capital per month, but higher returns usually come from selling puts on more volatile, riskier stocks. Use this calculator to compare the credit you receive against the capital at risk before assuming the trade is worthwhile.
If I get assigned, what price do I actually pay?
You buy the shares at the strike price, but the premium you received lowers your effective cost basis. Your net purchase price is strike minus premium — the same as the break-even price.
Disclaimer
This cash-secured put calculator is provided for informational purposes only and does not constitute financial, investment, options, or tax advice. Figures are based on the inputs you enter and the standard short-put payoff model; they exclude commissions, fees, assignment risk, early exercise, dividends, and changes in implied volatility. Options trading involves substantial risk and is not suitable for every investor. Always confirm your positions, margin requirements, and risk tolerance with a licensed financial professional before placing a trade.