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Cash-Secured Put

Selling a cash-secured put means collecting a premium for agreeing to buy 100 shares at the strike price if the stock falls below it — with the cash to do so already set aside. It's how many traders get paid to name their entry price.

When it makes sense

You'd genuinely like to own the stock, just at a lower price
Implied volatility is elevated, inflating put premiums
You want income with a defined worst case you've accepted: owning shares at the strike

How it works

Sell one put below the current price and hold cash equal to 100 × strike. Keep the premium regardless. If the stock finishes below the strike, you buy 100 shares at the strike — your effective cost basis is the strike minus the premium.

Risk & reward

Maximum profit: the premium. Maximum loss: substantial — if the stock collapses you still buy at the strike (cushioned by the premium). Functionally similar risk to owning the stock from the strike down.

Worked example

Stock at $45. Sell the 30-day $42 put for $0.95 ($95), holding $4,200 aside. Stock stays above $42: keep the $95 (~2.3% on the cash in a month). Stock at $38: you buy at $42 with an effective basis of $41.05.

Scan the market for cash-secured puts

OptionClaws ranks every cash-secured put in the market by return, probability, and liquidity — free for 7 days.