How to Sell Cash-Secured Puts on Interactive Brokers

You've read about cash-secured puts. You understand the mechanics. You know the risks. Now you want to actually do it.

This guide walks you through the entire process on Interactive Brokers TWS—from logging in to executing your first trade. It's the bridge between theory and practice.

Already trading on IBKR? Upload your activity statement to our IB Portfolio Analyzer to track your trades, calculate realized income, and see coverage status—or use our Chrome Extension for real-time portfolio monitoring directly in your browser.

📊 Estimated time: 7 minutes to learn | 15 minutes to execute your first trade
⏳ Last updated: November 22, 2025

What You'll Learn

✓ Check your IBKR account level and cash requirements
✓ Navigate the options chain and select a strike price
✓ Calculate annualized ROI before you trade
✓ Place and monitor your first CSP order with the right settings
✓ Understand assignment and next steps

View in app →

Quick Start (TL;DR)

Minimum requirements:

IBKR account with Level 2 options approval
Cash on hand = Strike Price × 100 (e.g., $10K for a $100 strike)
Stock you'd actually buy at your chosen strike price

30-second flow:

Log into TWS → Search stock (e.g., MSFT) → Right-click → "Option Chain"
Pick an expiration 20+ days out (monthly recommended)
Choose a strike 2–4% OTM where you'd be happy to own the stock
Check annualized ROI is 2%+ (use calculator below)
Right-click the put → Sell → Set as LIMIT order at bid price → Submit

Example: Sell MSFT $410 put for $2.10 premium = 6.2% annualized on 30-day trade

Early CTAs: Master Your CSP Strategy

Want to pick the right stocks? → Read our Stock Screening Guide for CSPs

Ready to optimize entry timing? → Learn IV & DTE Timing

Going beyond your first trade? → Get the full CSP Playbook with DTE Strategies

Pre-Flight Checklist
Step 1: Open the Options Chain
Step 2: Pick Your Expiration Date
Step 3: Choose Your Strike
Step 4: Calculate Your Return
Step 5: Place the Order
Step 6: Submit the Order
Step 7: Monitor the Order
Step 8: Confirm Your Position
Step 9: Monitor Until Expiration
Step 10: Assignment Day
Common Mistakes to Avoid
Tax Considerations
FAQ
Your First Trade Checklist

Pre-Flight Checklist: Before You Log In

1. Verify Your Account Type Supports Options

Not all Interactive Brokers accounts can trade options. You need at least:

Account type: Individuals accounts work. Company/trust accounts may have restrictions.
Account status: Account must be fully opened (not pending verification)
Options level: You need "Level 2" options approval minimum (CSPs are Level 2)

To check:

Log into Trader Workstation (TWS)
Go to Account → Account Settings
Scroll to "Options Approval" section
Confirm: "Level 2 - Covered Calls & Protective Puts" or higher

If you have Level 1, you'll need to upgrade. Go to the "Profile" section and request an upgrade.

2. Ensure You Have the Right Cash

Cash-secured puts require a cash buffer equal to the strike price × 100.

Example: You want to sell a $100 strike put. You need $10,000 in cash available.

Check your cash:

TWS home screen, look at "Account Summary"
Find "Cash (USD)" or "Available Funds"
Confirm you have enough for your trade + 10% buffer (in case of margin calls)

Pro tip: IB allows margin. But for CSPs, you typically need to reserve the full strike price in cash. Some brokers require 20-30% down if you accept margin. We'll assume you're using cash for simplicity here.

3. Choose Your Broker Platform

Interactive Brokers has multiple platforms:

Trader Workstation (TWS): Desktop app (most powerful, complex)
Mobile App: Simple, limited features
Web Portal: Middle ground

For selling puts, use TWS. It has the best options chains and order entry tools.

Step 1: Open the Options Chain (Find All Available Puts)

Via Trader Workstation Desktop

Quick setup (2 steps):

Log into TWS and search for a stock (e.g., "MSFT" for Microsoft)
- Use the top search bar or click "Quote" tab
Right-click on the stock → Select "Option Chain"
- A new window opens showing all available puts and calls

What you'll see:

Calls (Left Side)                 | Stock/Details (Center) | Puts (Right Side)
Strike | Bid-Ask | Implied Vol    |  MSFT = $427           | Implied Vol | Bid-Ask | Strike
...
230    | 197-200 | 1.2%           |                        | 0.8%       | 200-205 | 210
...
420    | 7.20-7.50 | 22%          |                        | 18%        | 0.80-1.10 | 410
...
430    | 2.00-2.20 | 20%          |                        | 18%        | 1.50-1.80 | 420

Focus on the right side (puts). This is what you care about.

Reading the Puts Column (Right to Left)

The three columns you need:

Column	Meaning	Action
Implied Vol	Market's volatility forecast	Higher IV = better premium
Bid-Ask	What you'll receive (bid) vs. pay (ask)	Use the bid price to sell
Strike	The price you're selling at	Pick where you'd buy the stock

Example: IV 18%, Bid–Ask $2.10–$2.40, Strike $410 means you'll collect ~$2.10/share.

Step 2: Pick Your Expiration Date (Monthly vs. Weekly)

The chain updates to show puts expiring on that date.

Pick monthly for your first trade. It's less stressful than weeklies (lower daily decay stress, more time to manage).

Step 3: Choose Your Strike (Where You'd Happily Own the Stock)

The key question: "At what price would I be comfortable owning this stock?"

Example: MSFT is trading at $427. You'd be thrilled to own it at $410 (a ~3.8% discount).

Scan down the Strike column on the right side of the options chain until you find $410 (or your target).

You'll see:

Puts
Implied Vol | Bid-Ask | Strike
18%         | 2.10-2.40 | 410

This tells you:

Bid: $2.10 = Brokers will pay this to buy the put from you
Ask: $2.40 = Brokers will charge this if you buy the put
IV: 18% = Market expects ~18% annualized volatility (good for premium)

Internal Link: Stock Selection Help

Not sure which stock to pick? Read our Best Stocks for Selling CSPs to screen for quality, liquid, high-premium names.

Step 4: Calculate Your Return (Annualized ROI)

Before you sell, calculate the actual return.

The formula:

$$ \text{Annualized ROI} = \frac{\text{Premium}}{\text{Strike Price}} \times \frac{365}{\text{Days to Expiration}} \times 100 $$

Real example:

Premium: $2.10 (what brokers will pay you)
Strike: $410 (capital at risk)
Days to expiration: 30

$$ \text{ROI} = \frac{2.10}{410} \times \frac{365}{30} \times 100 = \frac{0.51%}{1} \times 12.17 = \mathbf{6.2%} \text{ annualized} $$

Is 6.2% good? Yes. Anything 2% to 8% annualized on 20–45 day CSPs is solid. Below 2%? The premium isn't worth the capital lock-up.

CSP ROI Calculator (Pre-Filled Example)

Input	Your Value	Example
Premium per share (bid price)	$__	$2.10
Strike price	$__	$410
Days to expiration	__	30
Annualized ROI	↓ Calculate	6.2%

Formula: (Premium / Strike) × (365 / Days) × 100

Internal Link: Timing Your Entry

Want to pick the best IV and DTE combo? Check IV & DTE Timing Guide to identify your highest-premium setup.

Step 5: Place the Order (Right-Click → Sell)

Right-Click on the Put You Selected

In the options chain, right-click on the row where your strike is (e.g., $410 MSFT put).

A menu appears with options:

Trade
Buy
Sell ← Click this
Sell Short

Click "Sell" (you're selling the put to collect premium).

The Order Ticket Opens (Preset Fields)

A new window appears with default values already filled in:

Action:           SELL (✓ already correct)
Quantity:         1 contract (= 100 shares, ✓ correct)
Order Type:       LIMIT (default, ✓ use this)
Limit Price:      $2.10 (or your bid price)
Time in Force:    DAY (default, ✓ use this)

Adjust the Order Details

Action: Already SELL ✓

Quantity: 1 contract = 100 shares ✓

Order Type—Choose LIMIT (not MARKET):

LIMIT (recommended): You specify the minimum you'll accept. Example: bid is $2.10, so you set limit to $2.10 or $2.12. You'll wait for that price. Use this.
MARKET: Sell immediately at whatever the market offers right now (could be $2.05 if bid dropped). You lose premium. Avoid for CSPs.

Limit Price:

Set it at the bid price (e.g., $2.10) or slightly higher (e.g., $2.12)
Don't set it too high or it won't fill
This is what you'll receive per share

Time in Force—Use DAY:

DAY: Order expires at end of trading day if it doesn't fill. You get quick feedback tomorrow.
GTC: Order stays active until filled or you manually cancel. Good for patient traders, but adds complexity.

Example Completed Order (Before Submitting)

SELL to open 1 contract MSFT NOV 21 2025 410 Put
Limit Price:      $2.10
Time in Force:    DAY
Commission:       ~$1.65 (IB charges ~$1.65 per options contract)
Net Premium if Filled: $2.10 - $0.017 = ~$2.08/share
Total if Filled:  $208 on 1 contract

✓ Everything looks good? Move to Step 6.

Step 6: Submit the Order (Click Transmit)

Click "Transmit" or "Send Order" (button text varies).

A confirmation window appears:

Order Confirmed
Order ID: 12345678
Status: SUBMITTED
Timestamp: Oct 21, 2025 10:45 AM

✓ Your order is now live. You're waiting for the market to match a buyer to your sell request.

The options market usually fills within seconds to minutes (fast!).

Step 7: Monitor the Order Until Fill (Orders Tab)

Your order is "working" in the market. Track it here:

Steps to monitor:

In TWS, open "Monitor" or "Orders" tab
Look for your order (Action: SELL, Qty: 1, Strike: 410, Exp: Nov 21)
Watch the Status column:

Status	What It Means	Next Action
Submitted	Order received, awaiting a buyer	Wait (usually fills fast)
Filled	✓ Success! You've sold the put	Move to Step 8
Partially Filled	Half the order executed	Rare for 1-contract orders; adjust or resubmit
Cancelled	Order expired (didn't fill by market close)	Resubmit tomorrow or lower your limit price

Example: Your Order Gets Filled ✓

Order ID: 12345678
Action: SELL to open
Contract: MSFT NOV 21 2025 410 Put
Quantity: 1 (100 shares)
Fill Price: $2.10
Commission: -$1.65
Net Credit: $208.35
Status: FILLED
Timestamp: Oct 21, 2025 10:47 AM

Congratulations. You've successfully sold your first cash-secured put. You're now obligated to buy 100 shares of MSFT at $410 if assigned at expiration.

Step 8: Confirm Your Position (Verify in Account)

After fill, verify the position is in your account:

In TWS:

Go to "Portfolio" or "Positions" tab
Look for a section called "Short Options" or "Selling"
You should see:

MSFT NOV 21 2025 410 Put (Short)
Quantity: -1 contract
Entry Price: $2.10
Current Price: (varies daily)
P&L: (unrealized gain/loss)

✓ Cash is now reserved: Your $10,000 cash is set aside (you can't deploy it elsewhere). IB labels this as "Buying Power Reduction" in your Account Summary.

Step 9: Monitor Until Expiration (Watch for Earnings)

Your put is now active. Here's what happens day-by-day:

If MSFT Stays Above $410 (Preferred)

Your put stays out-of-the-money (OTM)
Premium value decays daily (great for you—time decay works in your favor)
On expiration (Nov 21), the put expires worthless
You keep the $208 premium as profit ✓

Best outcome. You collected income, stock avoided assignment, dry powder stays dry.

If MSFT Drops Below $410 (Assignment Risk)

Your put goes in-the-money (ITM)
Premium value increases (bad for you—position loses money)
You have three options:
1. Let it expire → Take assignment (own 100 shares at $410 strike)
2. Buy it back early (close the position, free up cash, lock in loss)
3. Roll it (sell a later/lower put for more premium to offset loss)

For your first trade: let it expire. Don't overthink it. If assigned, you wanted to own the stock anyway (that's why you picked that strike).

⚠️ Earnings Warning (Critical!)

Avoid selling puts within 1 week of earnings announcements. Here's why:

Bad scenario:
- Earnings in 3 days, you sell a put (high IV = fat premium)
- Stock reports → gaps down 10%
- Your put moves deep ITM
- You get assigned at the worst time

Better timing:

Sell puts 2+ weeks after earnings (volatility cooled off, premium normalized)
Or sell puts 1+ week before earnings (high IV, but time decay helps before announcement)

Check the company's earnings calendar before placing the trade. (Most brokerage platforms flag earnings dates in the options chain.)

Step 10: Assignment Day (If It Happens)

Expiration date arrives. If MSFT is below $410, you're assigned.

What happens automatically:

Your broker executes the assignment overnight (after market close)
100 shares of MSFT are deposited to your account (at $410 strike)
$41,000 cash is debited from your account
Your short put position closes

You now own 100 shares of MSFT.

Check your account:

Positions (Stocks)
MSFT: 100 shares @ $410 cost basis
(Your actual cost basis: $410 - $2.10 premium = $407.90)

Next Steps After Assignment

You now have three options:

Option	What Happens	Pros	Cons
Hold the stock	Keep your 100 shares	You bought at your target price; can sell covered calls next	Cash is tied up
Sell covered calls	Generate more income on the 100 shares	Income stacking; leverages your assignment	More active management
Exit immediately	Sell all 100 shares	Free up capital fast	Locks in assignment cost; possible loss if stock dropped further

For your first trade: Hold and monitor. You got assigned because the stock hit your price—that was the goal.

Common Mistakes to Avoid

❌ Mistake 1: Selling Too Deep In-The-Money (Wrong Strike)

Wrong: MSFT at $427, sell the $430 put. This guarantees assignment.

Right: MSFT at $427, sell the $410 put. You collect premium; assignment is unlikely.

Why it matters: Deep ITM puts almost always get assigned. You're not "selling" anymore—you're committing to buy. That's OK if you want to, but risky if you're just chasing premium.

Fix: Pick a strike that's 2–4% OTM (below current price for puts).

❌ Mistake 2: Ignoring the Bid-Ask Spread

Wrong: Bid $2.10, Ask $2.40. You set limit to $2.25 (midpoint).

Your order sits all day without filling because you're underselling.

Right: Set limit to the bid price ($2.10) or slightly higher ($2.12). Much higher fill rate.

Fix: Always use the bid price or no more than $0.05 above it.

❌ Mistake 3: Selling Puts You're Not Comfortable With

Wrong: "I hate this stock, but the premium is fat. I'll just sell the put and hope it doesn't get assigned."

Result: It gets assigned. Now you own 100 shares of a stock you dislike. Bad move.

Right: Only sell puts at strikes you'd genuinely like to own the stock at.

Fix: Before clicking send, ask yourself: "If this stock gets assigned to me tomorrow, am I happy?" If no, pick a different stock or strike.

❌ Mistake 4: Over-Sizing Your Position

Wrong: Selling 5 CSPs on the same stock (500 shares worth) when your account can only safely handle 200.

Result: You get assigned on 5 contracts. Your cash is blown out. You're stressed.

Right: Sell 1–2 puts per stock. Keep dry powder for new opportunities.

Fix: Diversify across 4–5 different stocks instead of concentrating on one.

❌ Mistake 5: Selling Right Before Earnings (Volatility Trap)

Wrong: Earnings are in 3 days. IV is high (40%+). Premium looks amazing. You sell.

Earnings come. Stock gaps 10% down. Your put is deep ITM. You get assigned at the worst price.

Right: Sell puts 2+ weeks after earnings (IV cooled, premium normalized, safer). Or 1 week before earnings (if you must).

Fix: Check the earnings calendar. Most platforms flag it. Ask: "When is earnings?" If it's within 1 week, skip.

FAQ: Common Questions Answered

What account level do I need at Interactive Brokers to sell CSPs?

You need Level 2 options approval minimum ("Covered Calls & Protective Puts"). You can request an upgrade in your Account → Profile settings. IBKR usually approves this within hours if your account is verified.

How much cash does Interactive Brokers reserve for a CSP?

Full strike price × 100. Example: Selling a $100 strike put requires $10,000 reserved. Some brokers let you margin this at 20–30%, but IB is stricter for CSPs. Plan for the full amount.

Do I need to have the cash before I sell the put?

Yes. IBKR will reject the order if you don't have sufficient buying power. Check your "Available Funds" or "Buying Power" in the Account Summary tab.

What happens to my cash if the put expires worthless?

✓ Great news: Your cash is freed up immediately after expiration. You can sell another put the next day on a different stock.

What if my put gets assigned? How does that affect my account?

Your account will:

Add 100 shares of the stock at your strike price
Deduct the full strike × 100 from your cash (e.g., $41K for a $410 strike MSFT put)
Your short put position closes (no longer obligated)

Your cash buying power will drop, but if you're happy to own the stock, that's the plan.

Can I close my CSP early instead of waiting for expiration?

Yes. You can buy it back anytime (before expiration) by:

Right-clicking the short put in your positions
Click "Buy to Close"
Set a limit price at the ask price (not above it)

If the stock has stayed above your strike, the put will be worth less than what you sold it for—you'll profit. Close early if you want to free up cash faster.

Should I avoid selling CSPs around earnings?

Absolutely. Earnings = unpredictable IV spikes and stock gaps. Sell 2+ weeks after earnings or 1 week before. Avoid the danger zone.

I sold a put and the stock is down. What should I do?

Step 1: Check how many days until expiration.

More than 10 days? Hold. Decay still works in your favor.
Less than 5 days? Hold even more. You're close to profit.
Assigned? Congrats—you bought at your target. Hold or sell covered calls.

Step 2: If you panic, remember: you picked a stock you'd be happy to own. It's doing what you wanted.

How are CSP premiums taxed?

Premium = short-term capital gains (ordinary income rates). If assigned:

Hold stock 1+ year → future gains are long-term
Exit quickly → all gains are short-term

Keep a spreadsheet with: date sold, strike, premium, expiry, assignment status. Your broker provides tax reports too.

Tax Considerations

Short-term vs long-term:

Premium from selling puts is always short-term income (ordinary income tax rates)
If you're assigned and hold the stock long-term (1+ year), future gains are long-term
If you're assigned and exit quickly, gains are short-term

Recordkeeping:

Track: date sold, strike, premium received, date expired, assignment status
Use a spreadsheet or broker's tax reports
Interactive Brokers provides downloadable tax data

Progression: From First Trade to System

Use this roadmap to scale from 1 trade to a steady income stream:

Month	Action	Metrics
Month 1	Sell 1 put per stock on 2 different stocks	Track: premium, DTE, stock behavior
Month 2–3	Sell 1–2 puts per stock on 4–5 stocks	Refine: best expiry dates, strike selection
Month 4+	Recurring weekly/monthly CSP placement	Optimize: for premium and assignment prob
Month 6	Review data: 15–20 puts sold	Calculate: total income, win rate, adjustments

By month 6, you'll have real data on outcomes, assignments, and returns. You'll be ready to scale to 5–10 simultaneous CSP positions.

Your First Trade Checklist (Download & Print)

Before you submit your order, verify all items:

✓ All checked? Congratulations. You've made your first CSP trade.

Next Steps After Your First Put

What to Do Over the Next 30 Days

Days 1–7: Monitor weekly (not daily). Your put should decay in your favor.
Days 8–20: Check for stock news or earnings surprises. Rebalance if needed.
Days 21–28: Watch for assignment risk (is stock approaching your strike?).
Day 29: Check if assigned. If so, note the outcome.
After expiration: Celebrate. Review the trade. Sell another one.

Review After Your First 5 Trades

Win rate: How many expired worthless vs. assigned?
Average return: What was your median annualized ROI?
Favorite stocks: Which had the best premiums and lowest assignment?
Timing: Did monthly expirations feel better than weeklies?

Use this data to refine your next trades.

Internal Link: Ready to Scale?

Once you've nailed 5–10 solo trades, explore advanced strategies in the Complete CSP Playbook (rolling, stacking, combining with covered calls).

The Bottom Line

Selling cash-secured puts on Interactive Brokers is straightforward once you know the 10 steps.

The flow:

Find a stock you'd buy at a target price
Sell a put at that price (collect premium)
Wait for expiration (30 days = 6%+ annualized return)
Either keep the premium (happy) or own the stock (also happy)

Next action: Open TWS. Search for a stock you like. Open the options chain. Pick your strike. Calculate ROI. Place the order. Execute today.

You've got this. 🚀

Interactive Brokers: How to Sell Cash-Secured Puts (TWS Walkthrough)