A secured put is a put option position backed by enough committed capital to honor the contract, so the obligation can always be met without borrowing. The most common form is the cash-secured put, where a seller writes a put and sets aside cash equal to the strike times 100 per contract, ready to buy the shares if assigned. This secured puts calculator runs the standard option-profit engine to show what a secured put position is worth at a chosen target price. Using its defaults - a $100 stock, a $105 strike, a $3.00 premium, one contract, and a $115 target - the engine returns a profit at target of $700, a 233.33% return on the $300 committed, a breakeven of $108.00, a maximum loss of $300, a total cost of $300, and a required move of 8.00%. The calculator turns an abstract idea into concrete dollar outcomes you can compare before committing capital to the trade.
What a Secured Put Is
Secured simply means the position is fully backed so it can never create an unfunded obligation. A cash-secured put writer collects premium today and accepts the duty to buy 100 shares per contract at the strike if the buyer exercises; the reserved cash guarantees that purchase. Investors use secured puts to generate premium income and to acquire a stock they already want at an effective price below today's quote, since assignment hands them shares while they keep the premium. The defining trade-off is that the upside is limited to the premium collected, while the downside, although bounded by a stock that can only fall to zero, is real if the share price collapses far below the strike. Securing the position removes leverage risk but not market risk.
The U.S. SEC's Investor.gov describes a cash-secured put as setting aside enough cash to buy the shares if assigned, which removes the margin risk of a naked put. The Options Industry Council at OptionsEducation.org notes the writer keeps the premium regardless of outcome but must be willing to own the stock at the strike.
How the Calculator Computes the Outcome
Worked Example With the Default Inputs
- 1Intrinsic at target = max(0, $115 - $105) = $10.00 per share
- 2Profit per share = $10.00 - $3.00 = $7.00
- 3Profit at target = $7.00 * 100 * 1 = $700.00
- 4Total cost (max loss in this engine) = $3.00 * 100 * 1 = $300.00
- 5Return percent = $700 / $300 * 100 = 233.33%
- 6Breakeven = $105 + $3.00 = $108.00
- 7Required move = ($108.00 - $100) / $100 * 100 = 8.00%
Outcomes at Different Stock Prices
| Stock at Expiry | Intrinsic Value | P&L per Share | Total P&L | Return |
|---|---|---|---|---|
| $100 | $0.00 | -$3.00 | -$300 | -100% |
| $105 | $0.00 | -$3.00 | -$300 | -100% |
| $108 | $3.00 | $0.00 | $0 | 0% |
| $115 | $10.00 | +$7.00 | +$700 | +233% |
| $120 | $15.00 | +$12.00 | +$1,200 | +400% |
| $130 | $25.00 | +$22.00 | +$2,200 | +733% |
When to Use and When to Avoid Secured Puts
A secured put suits an investor who wants to be paid while waiting to buy a quality stock at a price they consider fair, and who has the committed capital reserved so the trade carries no leverage risk. It works well in a neutral-to-mildly-bullish view on a name you genuinely want to own, especially when implied volatility is rich so the premium is generous. Avoid the strategy on a stock you would not be comfortable holding through a sharp decline, because assignment forces ownership at the strike no matter how far below it the market falls. Avoid it just before binary events such as earnings, where an outsized move can overwhelm the premium cushion, and avoid tying up capital in a low-premium put whose income does not justify the opportunity cost of the reserved cash.
A secured put cannot blow up from borrowed money, but assignment still forces you to buy the stock at the strike. If the share price falls far below the strike, the loss on the acquired shares can dwarf the premium collected. Only write secured puts on stocks you are prepared to own through a downturn.
Tax Treatment of Secured Puts
In the United States, premium from writing a put is generally not taxed when received but when the option expires, is bought back, or is assigned. If the put expires worthless the premium is usually a short-term capital gain on the expiration date; if it is assigned, the premium typically reduces the cost basis of the shares you are required to buy rather than being taxed separately. The governing mechanics, including the wash-sale rule and the straddle provisions that can apply when a put offsets another position, are set out in IRS Publication 550, Investment Income and Expenses. Because the treatment differs depending on whether the put expires, is closed, or is assigned, and on the account type, confirm your specific situation with a qualified tax professional rather than relying on a calculator.
Common Mistakes With Secured Puts
- Judging the trade by the headline return percent and overlooking the capital the position ties up and the loss possible on assignment.
- Writing secured puts on a stock you do not actually want to own, then being forced to buy it at the strike in a falling market.
- Selling a low-premium put where the income is too small to justify the opportunity cost of the reserved cash.
- Ignoring the required move and breakeven, which show the stock must clear breakeven, not just the strike, before this engine shows a profit.
- Forgetting that a stock can fall well below the strike, so a secured put's real-world loss can far exceed the premium collected.
- Letting an in-the-money option run into expiration and being assigned shares before deciding whether to close or roll the position.
