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Cash-secured put

Selling a put with the cash set aside to buy the shares if assigned. You are paid to agree to buy at a price you were happy with anyway.

Updated 2026-09-05

A cash-secured put is selling a put option while holding enough cash to buy the shares if you are assigned. You are paid a premium for agreeing to buy at the strike price.

It suits a specific situation well: you want to own a company, you think today's price is too high, and you have a price you would be happy to pay. Selling a put at that strike pays you to wait. If the stock never falls that far you keep the premium; if it does, you buy at a price you had already chosen.

The discipline is that the strike has to be a price you genuinely want to own at, which is a question about intrinsic value and margin of safety rather than about the option. Selling puts on a company you do not want to own, for the premium, is how people end up holding something they never analysed at a price that has already gone against them.

See also

  • Put option — The right to sell at the strike price. It gains value as the underlying falls, which makes it the standard way to buy insurance on a position.
  • Option premium — What the buyer pays the seller for the contract. It is the option's price, and it is made of exactly two things: intrinsic value and time value.
  • Covered call — Selling a call against stock you already own. You collect the premium and give up everything above the strike, which is a real trade, not free income.
  • Margin of safety — How far the price must sit from fair value before Angie calls it anything but fair: at least this much upside to be undervalued, at least this much downside to be overvalued. It exists because the estimate itself can be wrong.

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Educational content, not investment advice. Angie explains how a valuation is built so you can judge it yourself. What you do with that is your call.

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