Cash-Secured Put Calculator
Calculate your annualized yield, breakeven price, and capital requirements for cash-secured puts. See exactly what you'll earn — and what you risk.
What Is a Cash-Secured Put?
A cash-secured put (CSP) is an options income strategy where you sell a put option while setting aside enough cash to buy 100 shares of the underlying stock if the option is assigned. It is one of the two core legs of the wheel strategy and a favorite among income-focused investors.
When you sell a put, you collect a premium upfront in exchange for the obligation to buy 100 shares at the strike price if the stock drops below that level by expiration. If the stock stays above the strike, the put expires worthless and you keep the entire premium as profit — no shares change hands.
How the Yield Works
The annualized yield measures how much premium you collect relative to the capital you must set aside. For example, selling a 30-day put at a $50 strike for $1.20 premium requires $5,000 in capital (the “cash secured” part) and returns $120 per contract. That's a 2.4% return in 30 days, or roughly 29.2% annualized — though you should never assume every cycle will produce the same result.
Risk Management
Your maximum loss occurs if the stock goes to zero: you'd own 100 shares at the strike price with no remaining value. In practice, the breakeven price is the strike minus the premium collected. Choosing strikes at or below support levels, selecting stocks you genuinely want to own, and keeping position sizes manageable are the key risk controls. Many wheel traders target 30-45 day expirations at around 0.30 delta for a balance of premium income and probability of profit.
If Assigned: What Happens Next
If the stock drops below your strike price at expiration, your put will be assigned and you'll purchase 100 shares at the strike price. This is not necessarily a bad outcome — your effective cost basis is the strike minus all premiums collected. For wheel traders, assignment is simply the transition to the next phase of the strategy.
After assignment, you transition to selling covered calls above your effective cost basis. This generates additional income while you wait for the stock to recover. Each covered call premium further reduces your cost basis, improving your breakeven and eventual exit price.
Post-Assignment Checklist:
- 1. Calculate your effective cost basis (strike - total premiums collected)
- 2. Wait for a minor bounce or elevated IV to sell your first covered call
- 3. Sell calls at or above your cost basis — never lock in a loss unless you want to exit
- 4. Use our Covered Call Calculator to model strikes and yields
Ready to Execute?
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Frequently Asked Questions
What delta should I target for cash-secured puts?
Most CSP sellers target 0.20-0.35 delta, which corresponds to roughly 65-80% probability of the option expiring worthless. A 0.30 delta is a popular balance between premium income and safety. Lower deltas (0.15-0.20) earn less per cycle but have higher win rates.
What happens if my cash-secured put gets assigned?
You buy 100 shares at the strike price. Your effective cost basis is the strike minus all premiums collected. Most wheel traders then transition to selling covered calls on those shares to continue generating income.
How much capital do I need for a cash-secured put?
You need the full cash to buy 100 shares at the strike price. For a $50 strike, that's $5,000 per contract. Some brokers allow CSPs on margin, which reduces the capital requirement but adds leverage risk.
Options involve risk and are not suitable for all investors. All calculations are estimates — actual results will vary. Not financial advice. Full disclosure