Cash-Secured Put
Sell a put option while holding enough cash to buy the stock if assigned. This strategy generates income while giving you a chance to buy a stock you like at a lower price.
Payoff Diagram
How to Set Up This Trade
Sell one put option at a strike price where you would be comfortable owning the stock. Keep enough cash in the account to cover assignment (100 shares x strike price).
Trade Setup — 1 Leg
When to Use This Strategy
You are neutral to mildly bullish on a stock and would be happy buying it at the strike price. Best when implied volatility is high, so you collect more premium.
Tips from the Pros
- 1
Only sell puts on stocks you genuinely want to own — treat it as a limit buy order that pays you to wait.
- 2
Target 30-45 days to expiration for the best balance of time decay and premium.
- 3
If assigned, you can immediately sell covered calls against the shares to further reduce your cost basis.
Quick Reference
Max Profit
Limited to the premium received from selling the put.
Max Loss
Strike price minus premium received (if the stock goes to zero, you still own the shares at the strike price minus premium).
Breakeven
Strike price - premium received.
Best IV Environment
High IV
Time Decay (Theta)
Helps (positive theta)
Risk Level
Medium RiskLearn More
Our courses cover this strategy with real trade examples and live market analysis.
Browse CoursesRelated Bullish Strategies
Other strategies for a bullish market outlook.
Long Call
Buy a call option to profit from a rise in the underlying stock. This is the simplest bullish options strategy with unlimited upside potential and limited downside risk.
Bull Call Spread
A debit spread that profits from a moderate rise in the stock price. By selling a higher-strike call against your long call, you reduce cost and cap your risk — but also cap your upside.
Covered Call
Own 100 shares of a stock and sell a call option against them. This generates income from the premium while you hold the stock, in exchange for capping your upside at the strike price.