Cash-Secured Put Return Calculator
A cash-secured put (CSP) is a strategy where an investor sells a put option and simultaneously sets aside cash equal to the strike price times 100 to cover the potential obligation of buying shares. In exchange for accepting this obligation, the investor collects the put premium immediately. If the stock stays at or above the strike at expiration, the put expires worthless and the investor keeps the premium as profit. If the stock falls below the strike, the investor buys shares at the strike (potentially at a discount to the original stock price after netting the premium). This calculator computes the period return on the cash collateral and the annualized yield, which is the most useful metric for comparing different strike and expiration combinations.
Cash-secured put return formula
Collateral = strike * 100
Period return = premium / strike
Annualized return = (1 + premium/strike)^(365/days) - 1
Effective cost if assigned = strike - premium
The period return is expressed per share (premium divided by strike) since both quantities are per-share. The effective cost basis if assigned is the strike price less the premium received, representing the break-even stock price.
Cash-secured put strategy notes
- Cash-secured puts work best in flat to slightly bullish markets where you do not expect the stock to fall sharply.
- If assigned, you acquire shares at the strike price minus the premium, which may be a favorable entry if the stock is one you want to own.
- Choose strikes below the current stock price (out-of-the-money) for lower assignment probability; higher premiums at strikes closer to the current price compensate for higher risk.
- Compare annualized yields across different strikes and expirations to find the best risk-adjusted return.
- Brokers typically hold the collateral in a money market account, so consider adding money market interest to the effective yield.
Frequently asked questions
What is a cash-secured put?
A cash-secured put involves selling a put option while holding enough cash in your account to buy the shares at the strike price if assigned. The seller collects the premium and may be obligated to buy shares at the strike if the stock falls below it at expiration.
How is the return calculated?
Return per period = premium received / (strike price * 100 shares). This is the yield on the cash collateral held. Annualized return = (1 + period return)^(365/days) - 1.
What is the collateral requirement?
The cash collateral equals the strike price times 100 (shares per contract). For example, a $50 strike requires $5,000 in cash reserved. Brokers may allow margin accounts to use reduced collateral, but the conservative calculation uses the full strike value.
What is the risk of a cash-secured put?
The main risk is that the stock falls significantly below the strike, and you are obligated to buy shares at a price well above market value. The premium received provides limited downside protection. Maximum loss = strike - premium (per share), if the stock goes to zero.
How does a cash-secured put compare to a covered call?
Both strategies collect premium and have similar risk/return profiles when initiated at the same strike and expiration. A cash-secured put on stock X at strike $50 produces the same payoff as a covered call on stock X at $50 by put-call parity, assuming the same underlying price and interest rate.
Official sources
- Options Clearing Corporation: theocc.com.
- CBOE Options Institute: cboe.com/education.
- SEC Investor Education: sec.gov/investor.
Reviewed by the CalculatorHub team, edited by James Graham, 15 June 2026. See our methodology.