Sell Put Option Example: A Real AAPL Walkthrough from Strike Selection to Assignment

Selling a put option is one of the cleanest income trades in options: you collect premium today in exchange for a promise to buy a stock at a price you choose. The best way to understand it is not through a dictionary definition, but through a worked trade with real numbers, a clear breakeven, and an assignment plan before the position is opened.

This walkthrough uses AAPL at $175 and a $170 strike put expiring in 32 days sold for $1.90 per share ($190 per contract). It shows how strike selection, time to expiration, and capital requirement fit together, and exactly what happens if the trade finishes above, below, or right at the strike.

Quick tool: Before placing a live trade, model the same inputs in the Cash-Secured Put Calculator to see how strike, DTE, and premium change your return on capital.

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The Setup: Why Sell the Put?

You are bullish to neutral on AAPL. You would be happy to own 100 shares at a discount to the current $175 price, but you do not want to chase the stock at the market. Instead of placing a limit buy order at $170, you sell a put with a $170 strike.

The mechanics are straightforward:

• Action: Sell to open 1 AAPL $170 put
• Stock price: $175 at entry
• Strike: $170 (out of the money by $5)
• Days to expiration: 32
• Premium received: $1.90 per share, or $190 total
• Cash required in reserve: $170 × 100 = $17,000
• Breakeven at expiration: $170 − $1.90 = $168.10
• Return on cash if expired worthless: $190 ÷ $17,000 = 1.12%
• Annualized return if expired worthless: roughly 12.7%

The premium is not a free gain. It is payment for accepting the obligation to buy AAPL at $170 if the market is below that level at expiration.

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Strike Selection: Why $170?

Strike selection is the most important decision in this trade. The $170 strike is below the current price, so the put starts out of the money. That means the market must move against you before assignment becomes likely.

A good strike is not the one that pays the most. It is the price at which you would still want to own the stock in 32 days, even if the headline news is negative. If you would not be comfortable buying AAPL at $170 with cash today, you should not sell the $170 put.

Strike	Moneyness	Premium (approx.)	Assignment Risk	Best For
$175	At the money	~$3.80	Higher	Traders who want maximum premium and are fine owning at $175
$172.50	Slightly OTM	~$2.70	Moderate	A balance of income and a small margin of safety
$170	OTM	~$1.90	Lower	Buying at a clear discount if assigned
$165	Deep OTM	~$0.85	Low	Income on a stock you only want at a steep discount

The premiums above are hypothetical and rounded for illustration. In a live chain, implied volatility, the earnings calendar, and the bid-ask spread will move them. The point is the trade-off: more premium usually means more assignment risk.

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The Math: Premium, Breakeven, and Return

When you sell the put, $190 lands in your account the next trading day. Your broker also holds $17,000 in buying power as cash reserve.

Your profit zone at expiration is any price at or above $170, because the put expires worthless and you keep the full premium. Your breakeven is $168.10. Below that, you are assigned and the position shows a net loss relative to the market value of the shares you receive.

AAPL Price at Expiration	Option Value	Result	Profit/Loss	Return on Cash
$180	$0	Put expires worthless	+$190	+1.12%
$175	$0	Put expires worthless	+$190	+1.12%
$170	$0	Put expires worthless	+$190	+1.12%
$168.10	$1.90	Assigned at breakeven	$0	0%
$160	$10.00	Assigned, net cost $168.10	−$810	−4.76%
$150	$20.00	Assigned, net cost $168.10	−$1,810	−10.65%

Notice the difference between the strike price and your breakeven. Even if AAPL closes at $169 and you are assigned, you still made money on the trade itself. The problem only appears if the stock is below $168.10 at expiration, because then your cost basis is above the market price.

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The Assignment Scenario

Assignment is not a hidden trap; it is the intended outcome if the stock drops below the strike. Here is how it plays out.

On expiration Friday, AAPL closes at $165. The $170 put is $5 in the money, so it is automatically exercised. Your broker debits your account for $17,000 and deposits 100 AAPL shares. Your net cost basis is:

$17,000 paid for shares − $190 premium received = $16,810
$16,810 ÷ 100 shares = $168.10 per share

At the $165 market price, you have an unrealized loss of $310 ($16,810 cost basis minus $16,500 market value). You now have three practical choices:

1. Hold the shares if your thesis is intact. You bought AAPL at an effective $168.10, which is $6.90 below the original $175 price.
2. Sell covered calls against the 100 shares, often called the next leg of the wheel strategy. For example, selling a $175 call can generate more premium while you wait for a rebound.
3. Close the position at a loss if your view has changed. This is the discipline part of put selling: do not turn a short-term trade into a long-term mistake just to avoid a realized loss.

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Risk Management Before You Click Sell

Selling puts looks safe when the market is drifting higher, but the risk profile is the same as owning the stock below your breakeven. These rules keep the trade from becoming a portfolio problem.

Only Sell on Stocks You Want to Own

If you would not buy AAPL at $170 with cash, do not sell the $170 put. The premium can blind you to the fact that you are making a commitment, not just collecting income.

Reserve the Cash

A true cash-secured put keeps the full strike amount available. In this example, that is $17,000. Using margin to sell puts turns the strategy into a leveraged position with larger tail risk.

Size by Account, Not by Premium

If your account is $100,000, one AAPL put represents 17% of your capital on reserve. That is too concentrated for most traders. A common guideline is to keep any single put-selling position to 3–5% of total account value.

Have an Exit Plan

Decide before entry whether you will take profit at 50% of max gain, roll the put down and out if the stock drops, or accept assignment. Changing the plan after the trade is open usually leads to emotional decisions.

For a deeper framework on position sizing and loss controls, see Options Risk Management: Position Sizing & Loss Controls.

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When This Example Does Not Apply

Put selling is not a universal income strategy. Skip it when:

• The stock has an earnings report before expiration and implied volatility is pumped. The premium looks attractive, but the gap risk is real.
• You are not willing to own the stock at the strike. In that case you are speculating, not investing.
• You need the reserved cash for another purpose. Tied-up capital is an opportunity cost that the premium must justify.

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From This Trade to a Full Cash-Secured Puts Playbook

This single AAPL example is a starting point, not a complete system. A repeatable put-selling process includes scan criteria, DTE selection, profit-taking rules, and a consistent method for handling assignments. That is covered in the Cash-Secured Puts Playbook: DTE Optimization & Assignment Risk.

If you want to see how selling a put compares to buying a put, buying a call, and selling a covered call on the same underlying, read Call and Put Options Examples: 4 Real Trades on the Same Stock.

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Frequently Asked Questions

What is a sell put option example in simple terms?

Selling a put option means you collect a premium now and agree to buy 100 shares of a stock at the strike price if the stock is below that strike at expiration. With AAPL at $175, selling a $170 put for $1.90 means you keep $190 if AAPL stays above $170, or you buy 100 shares at an effective cost of $168.10 if it drops below.

How is breakeven calculated when you sell a put option?

Breakeven is the strike price minus the premium received per share. Here, $170 minus $1.90 equals $168.10. At that price you break even at expiration, but you still receive the shares if assigned.

What happens if a put you sold is assigned?

You buy 100 shares per contract at the strike price. Your broker debits the cash and credits the shares. Because you collected premium, your net cost basis is lower than the strike. In this example, you pay $17,000 and receive $190 in premium, for a net cost basis of $168.10 per share.

How do you choose a strike when selling put options?

Choose a strike you would be comfortable owning the stock at, regardless of short-term news. Out-of-the-money strikes lower assignment risk and premium. At-the-money or slightly in-the-money strikes pay more but assign more often. Match the strike to your outlook and capital, not just the premium.

What is the biggest risk of selling put options?

The biggest risk is owning the stock far below your breakeven after a sharp drop. Your loss below $168.10 behaves like a stock owner’s loss. That is why put selling should only be done on stocks you genuinely want to own, with cash fully reserved for assignment.

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Related Articles

Foundations and examples:

• Call and Put Options Examples: 4 Real Trades on the Same Stock
• Options Trading Example: 5 Real Trades Walkthrough

Strategy playbooks:

• Cash-Secured Puts Playbook: DTE Optimization & Assignment Risk
• The Wheel Strategy: Complete DTE-Optimized Guide
• How to Sell Cash-Secured Puts on Interactive Brokers

Risk and tools:

• Cash-Secured Put Calculator: Optimize Your Put-Selling Strategy
• Options Risk Management: Position Sizing & Loss Controls

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Disclaimer: This guide is for educational purposes only. Options trading involves significant risk of loss. Always do your own research, understand the risks, and consider your risk tolerance before trading. Past performance does not guarantee future results. Consider consulting with a financial advisor before making investment decisions.

Last updated: June 30, 2026 by the Days to Expiry Trading Team.

Expertise: Written by the Days to Expiry Trading Team — Options Strategy Specialists with 10+ years of combined trading experience.