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Looking for a way to buy your favorite stocks at a discount — and get paid to wait? The cash-secured put is a simple, low-risk options strategy that lets you earn income upfront while setting yourself up to buy shares at a lower price.
Popular with income-focused investors and options beginners alike, cash-secured puts are a smart alternative to placing a limit order.
What Is a Cash-Secured Put?
A cash-secured put involves selling a put option on a stock you’re willing to own, while setting aside enough cash to buy 100 shares at the strike price if assigned. In return, you collect a premium up front.
You're “secured” because you’re not borrowing margin — your cash covers the purchase if it happens.
Real Example
You want to own 100 shares of AMD at a lower price
AMD is trading at $160
You sell a put option with a $150 strike and collect a $3.00 premium
You set aside $15,000 in cash
Three outcomes:
AMD stays above $150: You keep the $300 premium. No shares bought.
AMD drops below $150: You’re assigned — you buy at $150 and still keep the $300
AMD crashes far below $150: You buy at $150, but your breakeven is $147 ($150 - $3)
Why Use This Strategy?
💰 Earn premium income while waiting to buy a stock you like
🧾 Lower your cost basis compared to buying at market price
🚫 Avoid chasing stocks — let the trade come to you
It’s a great alternative to passive limit orders because you get paid while waiting.
Risks and Rewards
❗ Downside risk is the same as owning the stock — if the price drops, you’re still buying it
✅ But you control the strike and collect income regardless
This is why many traders use cash-secured puts only on stocks they’re happy to own long-term.
Common Use Cases
Building a long-term stock position at a lower entry
Replacing a buy limit order
Generating income in quiet markets
Setting up the first leg of a wheel strategy
Try It with Our Calculator
Use the Options Income Calculator to:
See breakeven and ROI before placing the trade
Simulate outcomes based on price, time, and volatility
Compare premiums at different strike prices
TL;DR:
Selling cash-secured puts is a beginner-friendly way to generate income and buy quality stocks at a discount. You just need cash, patience, and a plan.