Cash secured put calculator.

How the math works

Every number above comes from five inputs and no hidden assumptions. If you want to check the arithmetic by hand, here it is.

Contracts and collateral

One contract obliges you to buy 100 shares at the strike, so securing it takes strike x 100 in cash. At a $45 strike that's $4,500 per contract, and $25,000 of cash secures five of them with $2,500 left over. The cash stays committed until the position expires or you close it, which is the part people underestimate: the return is real, but so is the opportunity cost of the capital sitting still.

Breakeven, or what you actually pay

Breakeven is the strike minus the premium per share. Sell a $45 strike for $1.10 and your breakeven is $43.90. That figure does double duty: it is the price below which the trade loses money, and it is your effective cost basis on the shares if you're assigned. Selling a put is a way to get paid for agreeing to buy something you wanted anyway, at a price below where it trades today.

Return on collateral

Premium divided by the strike, because the strike times 100 is the cash you tied up. A $1.10 premium on a $45 strike returns 2.44% over the life of the trade. That is the return if the put expires worthless, which is the outcome you're usually hoping for.

Some people divide by the net cash instead, subtracting the premium received, which produces a slightly larger number. This calculator uses the strike, because that is the amount your broker actually holds.

Annualizing

Multiplying by 365 / days puts a 7 day trade and a 45 day trade on the same scale. This is simple annualization rather than compounded, which is the convention most brokerages use. It does not assume you reinvest anything, and it is a comparison tool rather than a projection.

What this doesn't model

Commissions and contract fees, taxes, early assignment (American style puts can be assigned before expiration, and it gets likelier as a put moves deep in the money or approaches a dividend), the interest your collateral might earn in a money market position while it waits, and margin treatment if your account is not actually holding the full cash. It also assumes you hold to expiration rather than rolling or buying the put back.

Common questions

How is this different from a covered call?

A cash secured put commits cash and pays you to wait for shares at a lower price. A covered call commits shares you already own and pays you to cap their upside. Both collect premium, and both carry essentially the full downside of the stock. They're often run as two halves of one cycle: sell puts until you're assigned, then sell calls against the shares until they're called away.

Is assignment bad?

Not inherently. Assignment on a stock you wanted to own, at a price you chose, is the strategy working as designed. Assignment on a stock you sold puts on purely because the premium looked rich is a different situation, and it's the one that hurts. The honest test before selling any put: would you be content holding 100 shares of this at the strike for the next year?

Why is the premium so high on some strikes?

Premium is compensation for risk. An unusually rich one usually means the market expects the stock to move, often because earnings or news falls inside the expiration window. The premium is high for a reason, and the reason is the part worth understanding before you take it.

Can I lose more than my collateral?

Not on a cash secured put held to expiration. The worst case is the stock going to zero, leaving you with shares worth nothing against a cost basis of the strike minus the premium. That is a large loss, and the calculator shows it, but it is bounded. This is only true because the position is genuinely cash secured. Selling the same put on margin without the cash behind it is a different risk entirely.