The cash-secured put, end to end
A cash-secured put is agreeing to buy 100 shares at a price you choose, with the full purchase price already parked in your account, in exchange for cash you keep no matter what happens. If the stock stays above your strike you keep the premium and buy nothing. If it falls below, you buy the shares.
Two things happen when you sell a put. You get paid today. And you take on an obligation that only ends at expiry. Most explanations cover the first part well and rush the second, which is backwards, because the obligation is the trade.
The setup
PFE is trading at $26.40 on May 1. You would buy it at $25. Not "you think it might dip to $25", but you would genuinely be pleased to own 100 shares at $25 and hold them.
You have $2,500 in cash sitting in the account doing nothing.
The trade
You sell 1 contract of the June 19 expiry, $25 strike put, for $0.55.
- Credit received: $0.55 x 100 = $55, in your account that day.
- What you promised: to buy 100 shares at $25 each, if the holder of that put decides to make you.
- Cash locked up: $2,500. That is what "cash-secured" means and it is not a formality.
- Days to expiry: 49.
- Break-even: $25.00 minus $0.55 = $24.45.
The $55 is yours the day it lands and there is no scenario in which you hand it back. What is at risk is not the premium. It is the $2,500.
The three ways this ends
PFE closes above $25 on June 19. The put expires worthless. Nobody makes you buy anything. Your $2,500 is released, you keep the $55, and you made 2.2 percent on that cash in 49 days. This is the outcome you are playing for and, at this strike, the likely one.
PFE closes below $25. You are assigned. 100 shares are BOUGHT and delivered to you, and $2,500 leaves your account to pay for them. Note the direction: a put assignment puts shares INTO your account, which is the opposite of what a covered call assignment does. Your effective cost is $24.45 per share because the premium came off the price.
PFE drops to $19. You are assigned anyway, at $25, on a stock now worth $19. You own 100 shares that cost you $24.45 all-in and are worth $1,900. That is $545 underwater on day one. The $55 premium covered about 9 percent of the drop. Nothing about this trade protected you from the other 91 percent.
The part people get wrong
They treat the strike as a prediction and the assignment as a failure. It is neither. You were paid $55 because the market prices a real chance PFE trades under $25, and if that chance were zero the bid would be zero too.
So the only test that survives contact with a bad tape is this one: would you buy 100 shares of this at this price, right now, with this cash, if someone offered? If the honest answer is no and you are selling the put anyway because the premium looks nice, you have not sold a put. You have sold yourself a stock you did not want, on a delay, for a discount of 55 dollars.
What "secured" actually buys you
It buys you the ability to be wrong without a phone call from your broker. The cash is already there. Assignment is a settlement event, not a crisis. Sell the same put on margin instead and the requirement moves against you as the stock falls, which is a different trade with a different way of ending badly.
What it does not buy you is protection. Your maximum loss is $2,445 per contract, reached if PFE goes to zero. Companies do go to zero. Not often, and not usually the ones with a 49-day option chain worth selling, but the number belongs on the page.
What you need before you place one
- Strike x 100 in settled cash, per contract. $25 strike means $2,500. Not $2,500 of buying power on margin.
- Options approval. Cash-secured puts sit at a low tier at most brokers, often the same one as covered calls.
- A strike you would happily buy at. Repeated because it is the whole game.
- A chain worth trading. If the market is $0.40 bid at $0.75 ask, the $0.55 mid is a hope, not a fill, and the spread just took a fifth of your premium.
OptionsKing scores every candidate strike on a deterministic 0 to 100 scale and shows you nothing below 60, at any setting, with 75 the recommended bar. How it works covers what that guarantees.
Questions people actually ask
Can I lose money selling a cash-secured put?
Yes, and the number is large. Your maximum loss is the strike minus the premium, times 100, reached if the stock goes to zero. On the PFE example that is $2,445 per contract. The premium offsets a small slice of any decline and nothing more.
What happens if I get assigned and do not want the shares?
You own them. Sell them at the open on Monday if you want out, at whatever the market is then, and take the loss or gain. The cleaner move is to buy the put back before expiry if you have changed your mind, which costs whatever the put is worth at that moment.
Do I get the dividend?
Not while you are short the put. You own no shares. If you are assigned before an ex-dividend date you will own them in time to collect, and if you are assigned after it you will not.
How much can I make?
The premium. That is the entire ceiling and you know it before you place the trade. On the PFE example it is $55, or 2.2 percent on the secured cash over 49 days, and no market outcome pays you a cent more.
Sources
Rules and thresholds above were checked against these documents on August 4, 2026. Exchange and broker rules change. Confirm anything you are about to act on with your own broker.
Keep reading
Do the math on your own trade
Every price in this article is an illustrative worked example, not a quote. Read Cash-secured puts for the rest of the series, and the disclaimer before you act on any of it. Selling options carries real risk of loss, and the loss can be far larger than the premium you collected.