Before selling your first Cash Secured Put, there are two numbers many people get wrong: how much capital actually gets locked up as collateral, and what effective price you pay for the shares if you get assigned. Neither one is quite what it looks like at first glance.
What a Cash Secured Put really is
In a Cash Secured Put you sell a put option and set aside enough cash to buy 100 shares at the strike, in case you get assigned. You collect the premium now; in exchange, you take on the obligation to buy if the price falls below the strike at expiration.
The required capital: it’s not “strike × 100”
The most common mistake is thinking the collateral is simply the strike times 100 shares. That’s roughly right, but with a nuance: that’s the gross capital required, and the premium you collect from selling the put reduces your effective cost from day one — though the broker does lock up the gross amount as collateral, not the net.
A numeric example
Strike $45 × 100 shares = $4,500 locked as collateral
Premium collected: $0.90 × 100 = $90
Effective cost if assigned: 45 − 0.90 = $44.10 per share
What actually happens if you get assigned
If the price is below $45 at expiration, you get assigned: you buy 100 shares at $45 each, using the collateral you already had set aside. Your effective entry price, counting the premium collected, is $44.10 — better than if you’d bought the stock directly in the market at $45.
If the stock keeps falling after assignment — to $35, say — your loss on the now-owned shares still exists, even though your entry cost ($44.10) was better than the market price on the day you sold the put. A CSP lowers your entry cost, it doesn’t eliminate the risk of the stock continuing to fall.
The calculation the calculator solves instantly
With the free options calculator you enter the strike, the expiration, and the implied volatility, and instantly get: the estimated premium, the capital that will be locked as collateral, the effective cost per share if assigned, and the probability of that happening (POP).
Why this matters for portfolio sizing
If you sell several CSPs at once on different underlyings, each one locks up its own collateral. It’s easy to overestimate how much free cash you actually have left if you don’t add up every lock-up correctly — the calculator, strike by strike, helps you keep track before committing capital you don’t actually have available.
Conclusion
A Cash Secured Put has two numbers you always need to be clear on: how much capital gets locked up (the gross, not the net) and what your real effective cost is if assigned (strike minus premium). Calculating them precisely before selling the option — with the calculator instead of by eye — avoids liquidity and entry-price surprises.
