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Cash-Secured Put

Wheel1 legcreditbullish to neutral

Sell a put below the current price and hold the cash to buy the shares if they are put to you. The first half of the wheel, and the position this whole platform is built around.

What it is

You sell someone the right to put 100 shares to you at a chosen strike, and you set aside the cash to buy them. In exchange you keep the premium whatever happens.

Two outcomes, both acceptable by design. The stock stays above the strike and the put expires worthless, leaving you the premium and your cash. Or it finishes below and you buy 100 shares at the strike — at a price you chose, discounted further by the premium you already collected.

That second outcome is the point rather than the failure. Choosing a strike you would be content to own at is what makes the strategy work, and it is why Assignment Quality is scored on this platform alongside premium.

How it is built

Priced off the guide's shared chain, on a $50 stock. Every figure beneath the diagram is computed from these legs by the same engine the Strategy Builder uses.

ActionWhatStrikeQtyPrice
Sellput$451$1.50
$0$45now $50$43.50stock price at expiryprofit / loss
Max profit
$150
Max loss
−$4,350
Break-even
$43.50
Net credit
$150

Collateral held: $4,500 — the gross amount tied up, before the premium received.

The payoff of a short $45 put collected for $1.50, on a $50 stock. Flat and profitable anywhere above the strike — the premium is the whole gain, and it does not grow if the stock rallies. Below the strike the line falls at the same rate as owning the shares would, offset by the credit. Break-even sits at the strike minus the premium, which is also the price the shares would effectively cost.

Reading the shape

Profit is capped at the credit. However far the stock rises, the put simply expires and you keep $150 — the flat line to the right of the strike.

Loss is not capped, but it is not unlimited in the way a naked call is: the worst case is the stock going to zero, and your loss is the strike minus the premium, times 100.

The single break-even is the strike less the premium. Above it you make money, below it you are underwater on paper — while holding shares you chose to own.

How it is used

The conditions that suit it are elevated implied volatility, a strike at a price you would accept owning, and no earnings print inside the contract period. That is exactly what the screener's Wheel Score, IV Rank and earnings columns describe.

Return is measured against the collateral, not the premium. $150 on $4,500 held for 30 days is roughly 3.3% for the period — the annualized figure the platform shows scales that to a year, which is a run rate rather than a forecast.

Delta on the chosen strike is the rough odds of assignment, and it is how the Conservative, Balanced and Aggressive tiers are defined. A lower-delta strike sits further away and pays less.

The premium reduces your effective cost basis, so a put assigned at $45 with $1.50 collected leaves you holding shares at $43.50. That figure — not the strike — is what the covered call that follows should be measured against.
Cash-secured means the cash is actually held. Selling puts on margin without the collateral behind them is a different position with a different risk profile, whatever the ticket looks like.
A strike chosen for its premium rather than for the price is where this strategy goes wrong. Assignment is only benign if you were content with the price.

Like everything in this guide, these are descriptions of structures and conditions — context for your own decisions, not instructions to trade.

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