Naked puts versus cash-secured puts
A naked put and a cash-secured put are the same short put with the same payoff and the same maximum loss. The difference is collateral. Cash-secured locks the full strike, while a naked put in a margin account posts a fraction of it and that fraction rises as the stock falls, which is how a position that was never going to lose more can still end your account.
The risk graphs are the same graph. Anyone who tells you naked puts are riskier per contract is wrong, and anyone who concludes from that that they are equally dangerous is more wrong.
The identical part
Sell the PFE $25 put for $0.55. Break-even $24.45. Max profit $55. Max loss $2,445 if PFE goes to zero. Assignment means 100 shares BOUGHT at $25, and $2,500 has to come from somewhere.
All of that is true in both accounts. Identically.
The collateral, computed
Cash-secured: $2,500 of your cash, held, done.
Naked, under the Cboe strategy-based minimum, with PFE at $26.40:
- 20 percent of the underlying value: 0.20 x $2,640 = $528
- less the out-of-the-money amount: $26.40 - $25.00 = $1.40, so -$140
- plus option proceeds: +$55
- Requirement: $443
The alternative floor is proceeds plus 10 percent of the exercise price: $55 + $250 = $305. You post the greater, so $443.
$443 against $2,500. That is 5.6 times the leverage on the same contract. Your broker will very likely want more than the exchange minimum, and even at double it you are still posting a third of the cash version.
What the leverage does to you, which is not what people think
It does not make the contract riskier. It makes you sell more contracts. That is the entire mechanism and it is worth being blunt about.
With $25,000 in cash you can secure 10 PFE $25 puts. Same $25,000 as margin at the exchange minimum supports 56.
Fifty-six contracts is a commitment to buy $140,000 of PFE. On a $25,000 account. If PFE gaps to $18 on a pipeline failure, that is a $39,200 loss against $25,000 of equity, and the account is gone with a debit balance attached.
Nobody sets out to do that. They sell 6, it works, they sell 12, it works, and the position size that ends them was arrived at gradually over eight profitable months.
The maintenance call, which arrives before the loss does
The naked requirement is not fixed. It recalculates as the stock moves.
PFE falls to $22 with the put now trading at $3.30. Maintenance becomes option market value plus 20 percent of the underlying, with no out-of-the-money deduction because the put is now in the money: $330 + $440 = $770 per contract.
Up from $443. On 56 contracts that is $43,120 required against a $25,000 account that is also carrying an unrealized loss. The call goes out, you cannot meet it, and the broker liquidates at whatever the book offers on a down day.
That is the real difference and it has nothing to do with the payoff diagram. The cash-secured seller in the same drawdown does nothing at all. They already paid. Assignment is paperwork. The naked seller gets forced out of the position at the worst price of the move, before the recovery they were right about.
What a margin account also signs you up for
Selling naked puts requires a margin account and a higher options approval level than covered calls or cash-secured puts. That brings the FINRA minimum equity floor of $2,000, the rule that you cannot withdraw below it, and the pattern day trader machinery if you trade actively enough to trip it.
It also usually brings a broker-specific concentration limit that will stop you well before 56 contracts. Do not treat that as a safety net. It is their risk management, calibrated for them.
When naked puts are a reasonable trade
When the account is large enough that the position would be identical either way, and the released capital is doing something real rather than funding more contracts. A $400,000 account selling 10 PFE puts naked and holding the rest in treasuries is running the cash-secured position with better cash management.
The test is one number: if every put you are short assigned tomorrow, could you pay for all the shares? If yes, the label on the account is a technicality. If no, you are not selling puts. You are running leverage and calling it income.
Questions people actually ask
Is a naked put riskier than a cash-secured put?
Per contract, no. The payoff and the maximum loss are identical. In practice, yes, because the smaller requirement leads people to sell more contracts and exposes them to a maintenance call that forces liquidation before expiry.
What is the margin requirement on a naked put?
The Cboe strategy-based minimum is option proceeds plus 20 percent of the underlying value less the out-of-the-money amount, floored at proceeds plus 10 percent of the exercise price. On a $25 put with the stock at $26.40 that works out to $443 against $2,500 of cash.
Can I get a margin call on a naked put before expiry?
Yes. The maintenance requirement rises as the stock falls and as the out-of-the-money deduction disappears, so the collateral demand grows before any loss is realized.
How do I know if I am over-leveraged?
Add up the strike times 100 across every short put you hold. If assignment on all of them tomorrow would exceed what you could pay, you are running leverage rather than selling premium.
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.
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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.