What Is a Cash-Secured Put? Selling Puts With the Cash Ready

Reviewed by Leon Moyer - Published October 9, 2026 - Last reviewed October 9, 2026

A cash-secured put is an options strategy in which you sell a put and keep enough cash in your account to buy 100 shares at the strike price for each contract, so you can pay for the shares if you are assigned.

You are paid a premium up front for promising to buy a stock at a price you choose, usually below where it trades today. At expiration, a cash-secured put earns at most the premium. It breaks even at the strike price minus the premium. Its worst case is the stock going to zero, which loses the strike price minus the premium, times 100, for each contract.

How does a cash-secured put work?

Buyers and Sellers introduced the short put: you sell a put, collect the premium, and take on the obligation to buy 100 shares at the strike if the put's owner exercises. A cash-secured put is that same short put with the purchase money already set aside.

The trade has three moving parts:

1. Sell to open one put at a strike where you would be willing to buy the stock. You receive the premium immediately.
2. Hold cash equal to the strike x 100. Your broker typically sets it aside, so you cannot spend it on other trades while the put is open.
3. Wait for one of three endings. The put expires worthless and you keep the premium; you buy the put back early to end the obligation; or you are assigned and use the cash to buy the shares.

What are a cash-secured put's max profit, max loss and break-even?

Each of these is per contract, at expiration, before fees:

• Maximum profit = premium received x 100. You keep it if the stock finishes at or above the strike.
• Break-even = strike price - premium per share. Below that price, the trade loses money.
• Maximum loss = (strike price - premium) x 100, reached only if the stock goes to zero.

Why sell a cash-secured put instead of buying the stock?

Compare the put with the obvious alternative: buying 100 XYZ shares today at $50.

• If XYZ rises to $55, the shares gain $500. The put earns only its $80. A cash-secured put gives up the upside.
• If XYZ drifts down to $44, the shares lose $600. The put loses $220, because you effectively bought at $46.20 instead of $50.
• If XYZ goes to $0, the shares lose $5,000 and the put loses $4,620. The premium barely dents the worst case.

Another alternative is a limit order to buy at $47. It also buys the shares only if the price falls there, but it pays you nothing for waiting. The put pays $80 for the same patience. The trade-off is that a limit order can fill the moment XYZ touches $47, while the put most often turns into shares near expiration, though assignment can come on any business day, and the put's buyer, not you, decides whether it is exercised.

What are the risks of cash-secured puts?

The Options Industry Council's cash-secured put strategy guide calls the maximum loss "limited but substantial." The risks to plan for are:

• A large fall. Earnings misses, lawsuits or market crashes can gap a stock far below the strike overnight. You are still obligated to buy at the strike.
• Missed gains. If the stock rallies, you keep $80 and watch the shares you wanted run away from you.
• Cash tied up. The $4,700 cannot be used for anything else until the put closes, which matters if a better opportunity appears.
• Early assignment. Most U.S. stock options are American-style, so you can be assigned on any business day before expiration, which Cash-Secured Put Assignment covers.

Who are cash-secured puts for?

A cash-secured put fits an investor who has already decided they want to own a particular stock and has the cash to buy it. It does not fit a stock you would never want to hold, or cash you might need before expiration.

Your broker must approve your account for selling puts. Under FINRA Rule 2360, firms approve options accounts and must deliver the options disclosure document first. Many brokers place cash-secured puts at a lower approval level than uncovered selling, and some allow them in cash accounts and IRAs, but the rules differ from broker to broker. The Course 1 lesson Options Trading Levels - Broker Approval and Permissions walks through approval levels.