Cash-Secured Put Calculator

What a cash-secured put is

You sell a put on a stock or ETF and set aside the cash to buy the shares at the strike. You are paid the premium now. If the price stays at or above the strike at expiry, the put expires worthless and you keep the premium. If it falls below the strike, you buy 100 shares per contract at the strike, and the premium you kept lowers what you effectively paid. It is the mirror image of a covered call: you are paid for a price at which you were willing to buy anyway.

The formulas

With strike K, premium p per share, c contracts, d days to expiry, and 100 shares per contract:

• Premium income = p × 100 × c
• Cash held = K × 100 × c
• Return for the period = p / K
• Annualized return = (p / K) × 365 / d (simple, not compounded)
• Effective buy price = Breakeven = K − p
• Maximum profit = premium income, at any price at or above K
• Maximum loss = (K − p) × 100 × c, if the shares go to zero
• Profit or loss at price S = premium income − max(K − S, 0) × 100 × c

Worked example

One put, strike $100, premium $2.50, 30 days, the stock at $104 today:

• Premium income $250.00 on $10,000 of cash held
• Return 2.50% over 30 days, 30.42% a year (2.5% × 365 / 30)
• Effective buy price and breakeven $97.50, which is 6.25% below the $104 price today
• Maximum profit $250.00, maximum loss $9,750.00, and $100 lost for each dollar below $97.50
• At $90 on expiry: −$750.00 for the put, against −$1,400.00 for buying 100 shares at $104, so the put ends $650.00 better

In plain words: you gain at most $250, and you give up any rise above $100. In exchange you are paid to wait for a price 6.25% below today's. If the stock falls, the put ends ahead of buying the shares today; if it rallies, buying the shares now would have earned more. The figures agree with the independent reference to within 1e-9.

What the annualized figure does not tell you

It is the premium over the cash held, scaled to a year, as if you could repeat the trade at the same price every period. It says nothing about the risk of being assigned at a loss: the maximum loss is nearly the whole cash held, and one assignment in a drop can cost many months of premium. Commissions, early assignment, taxes, dividends and interest on the cash are not modelled; the premium is the one you type.

How it was checked

Every figure is compared in the test suite with a Python reference that builds the profit and loss from the definition of the option, finds the breakeven by root-finding and does the money arithmetic in exact fractions. It covers thirteen cases, including a zero premium, and nine inputs that must be refused, such as a premium above the strike. The method is described in the methodology.

Where to go next

Holding the shares and selling the call instead? Use the Options Profit Calculator, which covers covered calls and spreads in dollars. Want the Greeks of the put you are selling? Use the Option Greeks Calculator. Trading crypto perpetual futures as well? Check those trades with the Pre-Trade Check.

Use via API or MCP

This calculation is available as a deterministic API call: useful for bots or AI agents that need the premium, the effective buy price and the breakeven of a cash-secured put without reimplementing the arithmetic.