Cash-Secured Put Calculator

Compute cash required, premium income, annualized yield, and breakeven price if assigned for a cash-secured put position. Educational illustration only — not investment advice.

What Does a Cash-Secured Put Calculator Compute?

A cash-secured put calculator takes four inputs — stock price, strike price, option premium, and days to expiration — and returns the metrics that define the economics of the put-selling trade: total cash required, premium income, annualized yield, breakeven price if assigned, and percentage out-of-the-money from the current price. Each of these outputs answers a different question about the trade's risk and income profile.

Cash Required: Sizing Your Obligation

The most fundamental output is the cash required. Unlike covered calls, where you already own shares, cash-secured puts require you to set aside capital equal to the full purchase obligation. Formula: Strike price × 100 shares per contract. This cash is tied up as collateral — it cannot be deployed elsewhere while the position is open. The 'cash secured' designation means you are not using margin to support the obligation. This is what makes cash-secured puts a defined-risk approach (compared to naked puts, which use margin and amplify risk).

Premium Income and the Immediate Cash Credit

Premium income is the total cash you receive immediately when the put is sold: Premium per share × 100 × Number of contracts. For a single contract at $2.00 per share, the premium income is $200. This amount is credited to your account at the time of sale and is yours to keep regardless of what happens to the stock. Even if you are assigned, the premium reduces your effective purchase price. Even if you close the position early for a loss, you already received this cash.

Annualized Yield: Comparing Across Time

Annualized yield normalizes the premium across different DTE windows so you can compare trades on an equal basis. A 30-day put and a 60-day put at the same strike will have different absolute premiums — annualized yield allows you to evaluate which provides better compensation per unit of time. Formula: (Premium ÷ Strike price) × (365 ÷ DTE) × 100. This is a mathematical comparison metric, not a projection. Options income education uses annualized yield to evaluate whether a given premium compensates adequately for the risk and capital commitment of the trade.

Breakeven Price: Your Effective Purchase Price if Assigned

The breakeven price answers the question: if I get assigned, what is my effective cost basis? Formula: Strike price − Premium received. If you sell a $185 strike put and collect $2.00, your breakeven is $183 per share. This is your actual economic purchase price — you used $18,500 in cash but the $200 premium brings your net cost to $18,300 for 100 shares. However, if the stock falls to $160 after assignment, your breakeven is still $183 — you still have a significant unrealized loss. The premium provides a cushion only equal to the premium amount itself.

Percentage Out-of-the-Money: Measuring Distance to Strike

The % OTM metric tells you how far the stock would need to fall from its current price before reaching your strike. Formula: (Stock price − Strike price) ÷ Stock price × 100. A 5% OTM put on a $190 stock has a $180.50 strike — the stock needs to fall at least 5% before you risk assignment. A 10% OTM put has more distance but typically pays less premium. This metric is useful for evaluating how much of a decline the strategy can absorb before the position enters assignment territory. It is not a guarantee — stocks can fall much more than 10% quickly on news events, earnings gaps, or market corrections.

Using the Calculator for Strike Selection

The CSP calculator is a useful tool for exploring strike selection tradeoffs. Try adjusting the strike price while keeping premium and DTE fixed: moving the strike closer to the stock price increases cash required and decreases the % OTM buffer, but the premium you would actually receive in the market would increase. Moving the strike further away decreases cash required per share, increases the OTM buffer, but the real-market premium would be lower. The calculator lets you visualize how these variables interact — an essential part of options income education before making any actual trades.

Cash-Secured Puts vs. Limit Buy Orders

One educational framework compares cash-secured puts to limit buy orders: both aim to acquire stock below the current price, but the put also collects premium regardless of whether you are assigned. If you want to own a stock at $183 and it is currently at $190, you could place a limit buy at $183 and wait — collecting nothing. Or you could sell a $185 put and collect $2 in premium while waiting. If assigned, your effective cost is $183. If not assigned, you keep the $200 and can repeat the process. The tradeoff is the obligation — unlike a limit order you can cancel, the sold put creates a binding obligation to purchase shares at the strike price if assigned.

Cash-Secured Put Calculator — Common Questions

The OptionLeo 12-week program covers cash-secured put selection, strike evaluation, assignment planning, and the full wheel strategy cycle.