Cash-secured put calculator
A cash-secured put calculator shows what one short put really costs you: the full strike times 100 in cash set aside per contract, the break-even you would be buying shares at, and the return on that capital both for the period and annualized.
The capital number is the whole trade
Every screener quotes a cash-secured put by its premium. The premium is the small number. The number that decides whether the trade is any good is the cash you have to park against it, because that cash is doing nothing else for the next six weeks.
Sell the AAPL 170 put and you are committing 17,000 dollars. Collect 2.15 and you made 215, which is 1.26% on the capital. Over 45 days that is about 10.3% annualized. Fine. But if you were thinking of it as a 215 dollar trade, you were off by a factor of eighty.
Break-even is your purchase price
Strike minus premium. That is what you effectively pay per share if you get assigned, and it is the only price that should decide the strike. Ask one question before you sell: would you buy 100 shares here, at this price, today, and hold them? If the answer is no, the premium is not the reason to say yes.
This is why "getting paid to set a limit order" is the framing that actually clicks. You were willing to buy at 167.85. Someone will pay you 215 dollars for the promise. The catch is that a limit order lets you change your mind and a short put does not.
The worst case is not a rounding error
Max loss on a cash-secured put is break-even times 100, and it happens if the stock goes to zero. Nobody plans for zero. But a 30% gap on an earnings miss is common, and on the 170 put that is a 4,900 dollar unrealized loss against 215 dollars of premium collected. Twenty-three cycles of premium, gone in one print.
That is the picking-up-pennies critique, and it is correct as a description of the risk. It is wrong as an argument against the strategy, because the fix is position sizing and ticker selection, not abstinence. The trade goes bad when eight of your positions are in the same sector and all eight gap together.
A worked example
AAPL at 182.50. You sell the 170 put, 45 days out, for 2.15.
- Cash secured: 17,000. Net of the credit, 16,785 at risk.
- Break-even: 167.85, which is 8.0% below where the stock trades today.
- Return on secured cash: 1.26%, about 10.3% annualized.
- Keep the premium and the stock never gets near you: that is the base case, and at that strike it is most of the time.
Questions people actually ask
How much cash does a cash-secured put actually tie up?
Strike times 100 per contract, in full. A 170 strike needs 17,000 dollars per contract sitting in the account. Brokers that let you post less are giving you margin, which is a different trade with a different risk profile, whatever the ticket says.
What return should I be measuring against?
Return on the secured cash, not return on the premium. Premium divided by strike is the honest denominator, because the strike is what you committed. Screeners that quote a yield against the current share price are flattering the number slightly.
Is a cash-secured put safer than buying the stock?
Slightly, and only in one direction. Your break-even sits below the current price by the width of the premium, so you lose less than a shareholder in a selloff. In exchange you give up every dollar of upside above the strike. It is a trade, not a free improvement.
What if I get assigned early?
On a put it is rare unless the option is deep in the money with almost no extrinsic value left. If it happens you own the shares at the strike, the premium is still yours, and the position simply becomes the shares plus your break-even. That is the start of a wheel.