Cash reserved for a short put
Cash-Secured Put Calculator
Calculate collateral, premium income, break-even, assignment cost, maximum loss and simple annualized return for a cash-secured put held to expiration.
Cash-secured put result
| Expiration price | Put intrinsic value | Net P&L | Return on cash | Outcome |
|---|
Cash-secured put formulas
Shares covered = contracts × shares per contract
Cash collateral = strike × shares
Net maximum profit = premium × shares − fees
Put intrinsic value at expiration = max(strike − expiration price, 0)
Net P&L = (premium − put intrinsic value) × shares − fees
Break-even and effective purchase price = strike − premium + fees ÷ shares
Maximum loss = (strike − premium) × shares + fees
Return on secured cash = net P&L ÷ cash collateral × 100
The premium is the maximum gross income. Below the strike, the short put loses one currency unit for every one-unit decline in the stock. If assigned, the premium lowers the effective price paid for the shares. The modeled maximum loss occurs if the stock falls to zero.
Verified examples
Assignment below the strike
Sell one $95 put for $2.50 with a 100-share multiplier, $2 in total fees, 30 days to expiration and a $90 expiration stock price. Cash collateral is $9,500. The put has $5 of intrinsic value per share, so net P&L is −$252 and return on secured cash is −2.652632%.
Put expires worthless
With the same inputs and a $100 expiration price, the put expires worthless. Net profit and maximum profit are $248. Maximum return on the $9,500 collateral is 2.610526%, and simple annualized maximum return is 31.761404%.
Break-even and maximum loss
After allocating the $2 fee across 100 shares, break-even and the effective assigned purchase price are $92.52. If the stock reaches zero, the modeled maximum loss is $9,252.
How to interpret the results
- Cash collateral is the full strike obligation. Brokers may display buying-power treatment differently.
- Net cash at risk subtracts premium received and adds entered fees; it equals the modeled maximum loss at a zero stock price.
- Maximum return divides net premium by the full secured cash, not by margin buying power.
- Simple annualized return multiplies the period return by 365 ÷ days. It does not compound or assume the trade can be repeated.
- Discounts compare the strike and fee-adjusted effective purchase price with the current stock price.
Limits and assumptions
- The calculator models a fully cash-secured short put held to expiration. It does not model naked puts, spreads, rolling, early assignment or closing trades.
- Assignment is shown when the expiration price is below the strike. At exactly the strike, the tool labels the scenario “at the strike” because actual exercise depends on holder instructions and broker rules.
- Premium must remain below the strike, and total fees cannot exceed the total premium. These limits keep the displayed net credit and effective purchase price meaningful.
- Contracts and shares per contract must be whole numbers. Days are limited to 3,650, total shares to one billion and monetary prices to 100,000,000.
- The model excludes dividends, taxes, interest on collateral, bid-ask spreads beyond entered fees, volatility changes and counterparty or liquidity constraints.
Risk note: A cash-secured put can lead to buying shares after a large decline. Premium limits neither assignment risk nor the potential loss on the acquired stock. Results are scenario estimates, not investment advice or a guarantee.
Related calculators
Covered Call CalculatorOptions Profit CalculatorBlack-Scholes CalculatorImplied Volatility Calculator