Selling a put with enough cash reserve to buy the shares if assigned: income, or a purchase at a lower price.
The structure
A cash-secured put (Cash-Secured Put) is selling a put while setting aside the full strike price in cash: if you are asked to buy, the money is ready. You collect the premium right away in return for agreeing to buy 100 shares at the strike price if the stock falls to it.
The core idea
It is a buy order you get paid to wait on: you pick a price you would accept for the stock, below its current price, and you are paid a premium for standing there. If the stock never gets there, you keep the premium. If it does, you buy what you wanted at a lower price, less the premium you collected.
Maximum profit and loss
Maximum profit is the premium. The loss equals what a stock owner loses from the strike price downward, minus the premium, so a sharp drop hurts exactly as much as it hurts an owner.
Hypothetical example
A stock at $55 that you would gladly buy at $50: you sell a put with a $50 strike for one month at a $1.20 premium and set aside $5,000. It closes above $50: you keep $120 and can repeat the offer. It closes at $47: you bought at 50 and your effective cost is $48.80.
Common mistake
Selling it on a stock you would not actually accept owning, just for the premium: on assignment day your account fills with a stock you never wanted, and its story has changed. The strict rule: sell it only on what you would want to own at that price.
Where to see it on the platform
The options calculator shows it among its ready-made strategies, and the strategy guide suggests it in a rising, high-volatility setting where collecting premium is likelier to pay than paying it.
