Cash-Secured Put Calculator
Use this free cash-secured put calculator to model your income trade before you place it. Enter your strike price and premium received to instantly see max profit, breakeven, return on capital, and a full P&L diagram.
How to use the cash-secured put calculator
Enter your strike price, premium received, and number of contracts above and the calculator updates in real time. Here is what each input does.
Enter the put strike price
This is the strike price of the put you are selling. If the stock falls below this price at expiration, you are obligated to buy 100 shares at this price per contract.
Enter the premium received
Enter the premium collected per share for selling the put. The calculator uses this to compute your total income, breakeven price, and return on the capital you have set aside.
Enter number of contracts
Each contract requires you to set aside enough cash to buy 100 shares at the strike price. Increase this to see how your total income and capital requirement scale up.
Review your results
See your max profit, breakeven price, and return on capital instantly. The P&L diagram shows how the position performs at every stock price at expiration.
Understanding the cash-secured put strategy
A cash-secured put is one of the most practical income strategies for investors who are willing to buy a stock at a specific price. You sell a put option below the current stock price and set aside enough cash to purchase the shares if the option is assigned. If the stock stays above your strike through expiration, the put expires worthless and you keep the premium as pure income. If the stock falls below your strike, you buy 100 shares at an effective cost basis equal to the strike minus the premium received.
The strategy is a favorite among long-term investors because it lets you get paid to wait for a stock to come down to your target price. Instead of placing a limit buy order at $48.50 and hoping the stock dips there, you sell the $50 put, collect $1.50, and effectively agree to buy the stock at $48.50 if it falls. Either you keep the premium or you own a stock you wanted anyway at a price you were comfortable paying.
Return on capital
Because selling a cash-secured put requires you to hold cash equal to the strike price times 100 shares, the return on capital metric is important for evaluating whether the premium is worth tying up that capital. For example, selling a $50 put and collecting $1.50 ties up $5,000 in cash per contract and generates $150 in income, a 3% return for the duration of the trade. Annualizing this figure helps compare it to other uses of that same capital.
When to use a cash-secured put
Cash-secured puts work well when you are neutral to bullish on a stock, would genuinely be comfortable owning it at the strike price, and want to generate income while you wait. They are most effective when implied volatility is elevated, since you collect more premium. They are commonly used as the entry leg of the wheel strategy, where you sell puts until assigned, then sell covered calls on the shares you own until they are called away, and repeat the cycle.
Cash-secured put example with real numbers
Here is a worked example you can enter directly into the calculator above to see the full P&L diagram in action.
Trade setup: XYZ stock trading at $55.00
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Cash-secured put calculator FAQ
Common questions about the cash-secured put strategy and how to use this calculator.
A cash-secured put is a strategy where you sell a put option and hold enough cash in your account to buy 100 shares at the strike price if you are assigned. You collect a premium upfront. If the stock stays above the strike at expiration, the put expires worthless and you keep the full premium. If the stock falls below the strike, you are obligated to buy the shares at the strike price, but the premium collected reduces your effective cost basis.
The maximum profit is the premium received multiplied by 100 shares per contract. Using the example above, that is $150. You achieve max profit when the stock closes at or above the put strike at expiration, causing the option to expire worthless. You keep the premium and your cash is freed up to run the trade again in the next expiration cycle.
When you are assigned, your broker uses the cash you set aside to purchase 100 shares of stock at the strike price per contract. Your effective cost basis is the strike price minus the premium you already collected. For example, a $50 strike with $1.50 in premium means you own the stock at an effective cost of $48.50 per share. From there, most traders will sell a covered call against the shares to continue generating income while waiting for the stock to recover or rise to the covered call strike.
Return on capital equals the premium received divided by the cash required to secure the position. Cash required is the strike price times 100. For example, selling a $50 put and collecting $1.50 requires $5,000 in cash per contract and returns $150, which is a 3.0% return on capital for the duration of the trade. To annualize this, divide 3.0% by the number of days until expiration and multiply by 365.
The wheel strategy is a systematic income approach that cycles between two positions. First, you sell cash-secured puts on a stock you are willing to own. If the put expires worthless, you collect the premium and repeat. If you are assigned, you now own the shares. At that point, you sell a covered call against those shares to generate more income while waiting for the stock to be called away at the call strike. Once the shares are called away, you start the cycle again by selling cash-secured puts. Each leg of the wheel generates premium income, and the combined effect lowers your average cost basis over time.
This calculator is for educational and informational purposes only. Options trading involves substantial risk and is not suitable for all investors. Past performance is not indicative of future results. Always consult a licensed financial professional before making investment decisions.