If you've been selling covered calls, you've probably wondered about the cash secured put strategy. It's the mirror image—you sell puts instead of calls—but most traders stumble on the math. How much cash do you really need to set aside? What's your actual return if assigned? That's where a cash secured put calculator becomes invaluable.
What Is a Cash Secured Put (CSP)?
Before diving into calculations, let's clarify the strategy. When you sell a put option, you're selling someone the right to sell you shares at a specific strike price. To sell that put, you need to prove you can afford to buy those shares if assigned—hence "cash secured."
The formula is simple: Strike Price × 100 Shares = Cash Required
If you sell a $50 put on Tesla, you need $5,000 cash held aside. That's your security deposit. If the stock drops below $50 and the put is assigned, you're buying 100 shares at $50—using that $5,000 plus any additional funds.
Why a Cash Secured Put Calculator Matters
Let's say you're comparing multiple put-selling opportunities:
- Sell the $50 Tesla put for $2 premium (Jan 31 expiry)
- Sell the $45 Tesla put for $0.80 premium (Jan 31 expiry)
- Sell the $48 Tesla put for $1.40 premium (Jan 31 expiry)
Which is best? Not obvious without running numbers. A calculator shows you:
Return on Cash Deployed:
- $50 strike: $200 premium ÷ $5,000 cash = 4% return in 3 days
- $45 strike: $80 premium ÷ $4,500 cash = 1.78% return in 3 days
- $48 strike: $140 premium ÷ $4,800 cash = 2.92% return in 3 days
Suddenly, the $50 strike looks objectively better. That's the power of calculation.
Building Your Cash Secured Put Calculator
The essential variables:
- Strike Price – The put contract's strike price
- Number of Contracts – How many puts are you selling? (Each contract = 100 shares)
- Premium Received – What buyers are paying for the put
- Days to Expiration – Time remaining until the option expires
- Assignment Probability – Estimated chance of being assigned (optional but useful)
Core Calculations:
Cash Required = Strike Price × 100 × Number of Contracts
Total Premium Received = Premium per Share × 100 × Number of Contracts
Return on Risk (if assigned) = Total Premium Received ÷ Cash Required
Annualized Return = Return on Risk × (365 ÷ Days to Expiration)
Break-Even Stock Price = Strike Price - Premium Received
Example with Real Numbers:
- Strike price: $50
- Contracts: 2 (200 shares)
- Premium: $2.00 per share
- Days to expiration: 31
Calculations:
- Cash required: $50 × 100 × 2 = $10,000
- Total premium: $2.00 × 100 × 2 = $400
- Return on risk: $400 ÷ $10,000 = 4%
- Annualized return: 4% × (365 ÷ 31) = 47% annualized
- Break-even: $50 - $2 = $48
If assigned, you're buying 200 shares at $50, but you keep $400 in premium, so your effective cost basis is $48. Your cash is tied up for however long you hold the shares.
The Hidden Costs: What Most Calculators Miss
A basic calculator gives you the math, but trading reality has hidden layers:
1. Opportunity Cost
Your $10,000 cash is locked in. Could that money have earned 4% in a Treasury fund? If yes, subtract that opportunity cost from your put-selling return.
2. Assignment Timing
If you're assigned early (American-style options), you might be forced to own shares just before a dividend payment or earnings miss. A calculator can flag assignment dates.
3. Multiple Contracts
If you're selling puts on multiple stocks, your total capital requirement is the sum of all strikes × 100. A comprehensive calculator tracks total portfolio capital tied up versus total premium income.
4. Volatility Context
A $2 premium on a $50 strike looks great in isolation, but if Tesla's implied volatility has dropped 50%, that premium might be historically low. A calculator linked to IV data adds crucial context.
When to Use This Strategy
Cash secured puts make sense when:
- You have idle cash earning 0–1% in money market
- You're willing to own the stock at the strike price
- You want to generate 2–5% monthly returns on trapped capital
- The break-even price is below your "buy here" price for the stock
You probably shouldn't use it if:
- All your capital is already deployed
- You're forced to sell (need liquidity within days)
- You're selling on stocks you'd never own
Practical Steps to Use Your Calculator
- List Candidate Puts – Across 3–5 favorite stocks, find puts expiring in 7–45 days
- Input Each Trade – Strike, premium, days to expiration
- Rank by Annualized Return – Filter out anything below 20% annualized
- Check Break-Even – Is the break-even price a price you'd be happy to own at?
- Verify Capital – Sum total cash required across all positions
- Execute – Sell the puts that pass your tests
Common Mistakes in Manual Calculation
Confusing Percentage Terms:
A 4% return in 31 days is NOT 4% annualized—it's 47% annualized. Many traders misquote and overcommit capital.
Ignoring Assignment:
You calculated 4% return, then got assigned and held for 8 months. Your annualized return collapsed. Plan for assignment.
Over-Leveraging:
Selling 10 puts at $50 strike = $50,000 cash required. If you don't have it, stop. Using margin to fund CSPs magnifies losses.
Forgetting Dividends:
If you're assigned, you own the stock. An upcoming ex-dividend date might swing your decision.
The Bottom Line
A cash secured put calculator transforms put-selling from guesswork into a data-driven process. You'll know exactly which trades are worth your capital and which are leaving money on the table. Spend 10 minutes building or finding one—the clarity will pay for itself on your first trade.
Use this calculator not just to compare puts, but to understand the true cost of deploying your capital. Once you've internalized those calculations, you'll naturally gravitate toward the highest-probability, highest-return opportunities.