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Cash-secured put calculator

Selling a cash-secured put pays you a premium now in exchange for agreeing to buy 100 shares per contract at the strike if the stock is below it at expiry. Enter the trade to see what it pays on the cash you tie up, and what happens if the stock falls.

Profit or loss at expiry

Assumes the put is held to expiry and assigned if the stock closes below the strike. If assigned, the loss shown is on paper: you own the shares and can keep them, sell covered calls on them, or sell them.

How the numbers are worked out

• Cash to set aside = strike × 100 × contracts. This is what you pay if assigned.
• Premium received = premium × 100 × contracts, less fees.
• Return on cash = premium received ÷ cash set aside. Annualised scales that to a year (× 365 ÷ days). The compounded figure assumes you could repeat the same trade back to back all year, which you usually can’t, so treat it as an upper bound.
• Breakeven = strike − premium per share (after fees). Below this at expiry, the trade is losing money.
• Room to the strike = how far the stock can fall from today before the put is in the money.
• Time value = the part of the premium that is not intrinsic value. For an in-the-money put, intrinsic value (strike − share price) is not income: you give it back on assignment.

What this calculator leaves out

• Early assignment, and closing or rolling the put before expiry.
• Interest your broker may pay on the cash while it sits as collateral, which adds to the real return.
• The bid/ask spread. Use the bid, or what you actually expect to be filled at, not the last trade.
• Taxes, currency conversion, and dividends paid while you hold the put (you get none until you own the shares).
• Why the premium is what it is. A rich premium usually means the market expects a big move — check the earnings date and the news before selling.

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