Maximum loss on a cash-secured put
The maximum loss on a short put is the strike times 100 less the credit, reached only if the stock goes to zero. On the worked position that is $11,022. It is the right answer to the wrong question, because no account is sized around bankruptcy. The planning number is the loss on a two or three standard deviation move, and here it is a fifth of the headline figure.
Two numbers describe the downside of a short put. One goes in the disclosure document and one goes in your plan.
The position
Cycle 3 of the running book. AMD at $126, short the $113 put, 46 days, 46 percent implied volatility, sold for $2.78.
- Cash secured: $11,300. That is $113 times 100, parked for the whole life of the trade.
- Break-even: $110.22. The strike less the credit.
- Maximum loss: $11,022, if AMD goes to zero.
- Maximum gain: $278, if it stays above $113.
The asymmetry is the trade. You are risking $11,022 to make $278, and you win about three times in four. Anyone who describes that as conservative is describing the win rate and ignoring the ratio.
The number nobody plans around
$11,022 assumes AMD is worth nothing in six weeks. Companies do go to zero, and when they do it is usually not in 46 days from a $126 share price.
Using it to size positions produces the result in the sizing page: a 2 percent risk limit on a $50,000 account permits zero contracts on every ordinary name, including a $10 stock. A rule that forbids the strategy is not a risk rule.
The ladder that is useful
One standard deviation over 46 days at 46 percent implied volatility is 16.3 percent. Here is what each multiple of it costs.
| Move | Stock at expiry | Loss after the credit | Share of a $50,000 account |
|---|---|---|---|
| 1 sigma down | $107.02 | $320 | 0.6% |
| 2 sigma down | $90.89 | $1,933 | 3.9% |
| 3 sigma down | $77.20 | $3,302 | 6.6% |
| what happened: 1.67 sigma | $96.00 | $1,422 | 2.8% |
| to zero | $0.00 | $11,022 | 22.0% |
The three-sigma loss is 30 percent of the maximum loss. That gap is the whole argument: size to the third row and you are planning for something that happens, size to the last row and you cannot trade at all.
And the actual outcome sat between one and two sigma. A 23.8 percent fall in six weeks feels like a catastrophe while it happens and prices out at 1.67 standard deviations, which on 8 cycles a year across 6 positions is a thing you should expect several times.
Two more numbers worth knowing
The odds of touching the break-even: 42.9 percent. Nearly half the time this trade dips below $110.22 at some point, whatever it does by expiry. That is the number that predicts how the position feels, and it is roughly double the odds of actually finishing there.
The whole book's maximum loss: $26,254, which is 52.5 percent of the account. Six cash-secured puts on ordinary large companies, and the theoretical worst case is half the money. Nobody who sells six puts thinks of themselves as risking half the account, and technically they are.
Where the loss actually arrives
Not as a debit. As stock.
At expiry AMD was $96 and the put was assigned, so the account bought 100 shares at $113 and the $11,300 of collateral became $9,600 of equity. Nothing was realized. Nothing was crystallized. The loss existed entirely as a difference between what you paid and what the shares were worth, and it stayed that way until the shares were eventually sold.
That matters because it is the point where people act. The position that had lost $1,422 on paper went on to make $2,342 over the rest of the year, and the version where you closed it at the bottom instead cost $3,763. The maximum loss on a cash-secured put is rarely what gets you. The reaction to a two-sigma move is.
OptionsKing scores every candidate strike on a deterministic 0 to 100 scale, blends that score with the return on the capital the trade ties up, and shows you the highest-ranked handful. There is no minimum score. How it works covers what the ranking does and does not tell you.
Questions people actually ask
What is the maximum loss on a cash-secured put?
The strike times 100 less the premium, reached only if the stock goes to zero. On a $113 put sold for $2.78 that is $11,022 against a maximum gain of $278.
What loss should I actually plan for on a short put?
The two or three standard deviation move. On the worked position those were $1,933 and $3,302 against a headline maximum of $11,022, and the real outcome was a $1,422 loss on a 1.67 sigma fall.
How much of my account is at risk if I sell six cash-secured puts?
Theoretically all of the collateral. Six ordinary puts in the worked book carried a combined maximum loss of $26,254 on a $50,000 account, which is 52.5 percent. A simultaneous 25 percent decline in all six, by contrast, cost $4,136.
Do I lose money the moment a put is assigned?
Nothing is realized at assignment. Your $11,300 of collateral becomes 100 shares worth $9,600, and the difference stays unrealized until you sell them. What you do next decides the outcome.
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 Running the book 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.