What Is a Cash-Secured Put? Cash, Premium, Assignment
A cash-secured put is a put you sell while setting aside enough cash to buy the shares if you are assigned. You collect a premium up front. If the put finishes in the money, you buy the shares at the strike.
Key takeaways
- Cash secured = strike × shares. The premium is not subtracted from that cash.
- Effective purchase price if assigned = strike − net premium per share.
- A $150 strike on 100 shares sets aside $15,000. A $3.50 premium puts the effective price at $146.50.
- You still buy at the strike if assigned. The premium is what lowers the net cost in this scenario.
The formula
Cash secured = strike × shares
Net premium = premium per share × shares − commission
Effective purchase price = strike − net premium per share
Static return divides net premium by the cash secured. Annualized return multiplies that by 365 ÷ days to expiration. That scaling assumes the same premium could be repeated. It is not a forecast.
A worked example
Sell a put on 100 shares at a $150 strike. Premium is $3.50 a share, 30 days remain, and commission is $0.
- Cash secured = $150 × 100 = $15,000.
- Net premium = $3.50 × 100 = $350.
- Effective price = $150 − $3.50 = $146.50.
- Static return = $350 ÷ $15,000 ≈ 2.33%.
Use the cash-secured put calculator for the same inputs. If you are not assigned, you keep the premium and the cash. If you are assigned, you own the shares at the strike, and the premium reduces the net cost as above.
What the cash figure tells you
It is the cash the strike would require, before the premium arrives. The effective price is a way to read that premium against the strike. It is not a limit order sitting below the market.
What the cash figure leaves out
Early assignment, taxes, and a move in the option before expiration are absent. The obligation is real: assignment means you buy at the strike, even if the shares are far below it. The premium reduces the net cost. It does not cancel the purchase. After assignment, a later call sale is a separate trade, covered in what a covered call is.
Apple shows a share price you might compare with the strike. The page does not quote the put.
For general education only. Nothing here is investment advice.
Frequently asked questions
- What cash does a cash-secured put set aside?
- Cash secured equals the strike times the shares. A $150 strike on 100 shares sets aside $15,000. The premium arrives up front and is not subtracted from that cash figure.
- What is the effective purchase price if assigned?
- Subtract net premium per share from the strike. A $3.50 premium and no commission on a $150 strike is an effective price of $146.50. You still buy at the strike. The premium lowers the net cost in this scenario.