Cash-Secured Put Calculator
Work out exactly what a cash-secured put pays you, how much cash it ties up, and how far the stock can fall before you lose money. Nothing to sign up for — change any number and the results update immediately.
Cash required
$1,600
16.00 × 100 × 1
Premium collected
$55
Yours to keep either way
Return on capital
3.44%
Over 35 days
Annualized return
35.8%
Comparison figure, not a forecast
Breakeven price
$15.45
Strike minus premium
Downside protection
11.7%
Fall from today before a loss
If it expires worthless: you keep $55 and your $1,600 is released — a 3.44% return in 35 days.
If you're assigned: you buy 100 shares at $16.00 for $1,600, but because you kept the premium your effective cost is $15.45 per share — 8.6% below today's price before the premium is even counted.
How the Numbers Are Calculated
None of this is complicated, and it's worth understanding rather than trusting a box:
- Cash required = strike × 100 × contracts. Your broker holds this until the position closes.
- Return on capital = premium ÷ strike. Measuring against the collateral, not the stock price, is what keeps the figure honest.
- Annualized = return on capital × (365 ÷ days). Use it to compare a 30-day trade against a 45-day one.
- Breakeven = strike − premium. Below this you're losing money on assignment.
- Downside protection = how far the stock can fall from today before hitting breakeven.
The number most people over-weight is annualized return. It assumes you find an equally good trade the moment this one closes, every time, for a year. Treat it as a way to rank candidates against each other, not as a yield you'll actually earn.
A Worked Example
Say a stock trades at $17.50 and you sell one 35-day put at the $16 strike for $0.55. The calculator above turns that into six numbers:
| Cash required | $1,600 | $16 strike × 100 shares |
| Premium collected | $55 | $0.55 × 100, yours immediately |
| Return on capital | 3.44% | $55 ÷ $1,600 |
| Annualized | 35.8% | 3.44% × (365 ÷ 35) |
| Breakeven | $15.45 | $16 − $0.55 |
| Downside protection | 11.7% | $17.50 → $15.45 |
Three things can happen. If the stock closes anywhere above $16, the put expires worthless, you keep the $55 and your $1,600 is released — 3.44% in 35 days. If it closes at $15.45 you are exactly at breakeven: assigned 100 shares, but the premium covers the difference. If it closes at $15.00 you are assigned and down $45 on paper — which is the part worth sitting with, because had you simply bought the shares at $17.50 you would be down $250 instead.
That gap is the whole argument for the trade. It is not that selling puts avoids losses; it is that you enter lower and get paid for waiting. The cost is that your upside is capped at $55 no matter how far the stock runs.
Choosing a Strike
The calculator prices whatever strike you give it. Picking that strike is the actual decision, and delta is the usual shorthand — a put's delta is a rough approximation of its chance of finishing in the money, so a 0.30 delta put has something like a 70% chance of expiring worthless. Rough is the operative word; it drifts with volatility and time.
- 0.15–0.20 delta — well out of the money. Small premium, high probability of expiring worthless. Sensible on a stock you're lukewarm about owning.
- 0.25–0.35 delta — where most wheel traders operate. Meaningful premium, assignment a genuine but minority outcome.
- 0.40+ delta — close to the money. Rich premium, and you should expect assignment often enough that it needs to be an outcome you actively want.
Notice that a 0.30 delta put is typically 5–15% out of the money at 30–45 days depending on the stock's volatility. If a strike that far out is paying an unusually fat premium, that is the market telling you something about the risk — not a free lunch.
You Don't Have to Hold to Expiration
A common approach is closing at around 50% of maximum profit rather than running to expiry. Take the example above: if the put's price halves to $0.275 after 12 days, buying it back locks in about $27.50 of the $55. That looks like leaving money on the table until you annualize it — 1.72% over 12 days is roughly 52% annualized, against 35.8% for holding the full 35 days.
The reason is that option decay is not linear and the last stretch to expiration carries the most gamma risk for the least remaining premium. Closing early frees the collateral for the next trade and takes assignment risk off the table. It also costs a commission and forfeits the remaining premium, so it's a judgement call rather than a rule — but "hold every put to expiration" is rarely the optimal habit.
What the Calculator Can't Tell You
It prices the trade, not the risk. Two puts can show an identical 3% return on capital while being completely different propositions — one on a stable dividend payer, the other on a stock that's fallen 30% this month and has earnings next week. The maths is the same; the outcomes are not.
Before selling any put, check the things this page can't see: implied volatility rank (is the premium actually rich, or does it just look big?), options liquidity, whether earnings fall before expiration, and — most importantly — whether you'd genuinely be content owning the shares. Our cash-secured put screener checks all of those across 300+ tickers, and this guide covers the mechanics if you're new to the trade.
Already assigned and writing calls against the shares? The covered call calculator is the other half of the wheel, and the wheel strategy calculator models both legs as one complete cycle.
Frequently Asked Questions
How do you calculate return on a cash-secured put?
Return on capital is the premium collected divided by the collateral required. Collateral is the strike price times 100 per contract. Selling a $16 put for $0.55 collects $55 against $1,600 of collateral, which is a 3.4% return for the length of the trade.
How is annualized return calculated on a cash-secured put?
Annualized return is the return on capital multiplied by 365 divided by the days to expiration. A 3.4% return over 35 days annualizes to about 36%. It is a comparison tool for trades of different lengths, not a prediction, because it assumes you keep redeploying the capital at the same rate.
What is the breakeven price on a cash-secured put?
Breakeven is the strike price minus the premium received per share. If you sell a $16 put for $0.55, your breakeven is $15.45. You only lose money if the stock finishes below that price, because the premium you kept offsets the first $0.55 of decline.
How much cash do I need for a cash-secured put?
Strike price times 100 per contract. A $16 strike requires $1,600 held as collateral, regardless of the stock's current price. Your broker freezes that amount until the position expires or you buy it back.
What is downside protection on a cash-secured put?
Downside protection is how far the stock can fall from its current price before you start losing money, measured to your breakeven. It combines the gap between the stock price and your strike with the premium you collected, and is the clearest single measure of how conservative a put is.
What delta should I sell cash-secured puts at?
Most wheel traders sell between 0.25 and 0.35 delta, which is roughly a 65-75% chance of the put expiring worthless and typically lands 5-15% out of the money at 30-45 days. Below 0.20 delta the premium gets thin; above 0.40 you should expect assignment often enough that owning the shares needs to be an outcome you actively want. Delta is only an approximation of assignment probability and it shifts as volatility and time change.
Should I close a cash-secured put early or let it expire?
Closing at around 50% of maximum profit often beats holding to expiration once you annualize it. Collecting $27.50 of a $55 premium in 12 days is about 52% annualized, against 35.8% for holding the full 35 days, because option decay is not linear and the final stretch carries the most risk for the least remaining premium. Closing early also frees the collateral and removes assignment risk, at the cost of a commission and the premium you give up.
What happens if the stock drops below my strike price?
You are assigned 100 shares per contract at the strike, but because you keep the premium your effective cost is the breakeven, not the strike. Selling a $16 put for $0.55 on a stock that falls to $15.00 means buying at an effective $15.45 and sitting on a $45 unrealized loss — versus $250 had you bought the shares outright at $17.50. Assignment is not a failure of the trade; from there you sell covered calls against the shares, which is the next leg of the wheel.
Want this as a spreadsheet?
Free Google Sheets version with all three calculators — cash-secured put, covered call, and the full wheel cycle — so you can model trades offline and keep your own copy.
Single-trade math only. The screener sheet adds live quotes and scoring across 300+ tickers, and the income tracker adds trade journalling and tax estimates.