{"id":7233,"date":"2022-03-10T16:58:35","date_gmt":"2022-03-10T08:58:35","guid":{"rendered":"https:\/\/slashtraders.com\/?p=7233"},"modified":"2026-03-19T20:03:51","modified_gmt":"2026-03-19T12:03:51","slug":"cash-secured-put","status":"publish","type":"post","link":"https:\/\/www.slashtraders.com\/en\/blog\/cash-secured-put\/","title":{"rendered":"Cash-Secured Put on Undervalued Stocks: Buy at a Discount on Top of a Discount"},"content":{"rendered":"<p class=\"wp-block-paragraph translation-block\">Do you know how to buy stocks at a discount by <a href=\"https:\/\/slashtraders.com\/en\/blog\/buy-to-open-vs-buy-to-close\/\" target=\"_blank\" rel=\"noreferrer noopener\">selling options?<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">Today SlashTraders will show you how to sell Cash Secured Put <a href=\"https:\/\/slashtraders.com\/en\/blog\/what-are-options\/\" target=\"_blank\" rel=\"noreferrer noopener\">option contracts<\/a> to reduce the costs of purchasing stocks.<\/p>\n\n\n<\/p>\n\n\n\n<figure class=\"wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio\"><div class=\"wp-block-embed__wrapper\">\n<span class=\"Dd7ytbzTNACH4\"><iframe title=\"How to Sell Cash Secured Put to Buy Stocks at Discount\" width=\"500\" height=\"281\" src=\"https:\/\/www.youtube.com\/embed\/w0m_-AOsz00?feature=oembed\" frameborder=\"0\" allow=\"accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share\" referrerpolicy=\"strict-origin-when-cross-origin\" allowfullscreen><\/iframe><\/span>\n<\/div><\/figure>\n\n\n<p><\/p>\n\n\n\n<h2 class=\"wp-block-heading\">What Is Selling a Cash Secured Put?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">A Cash Secured Put is an options strategy that requires holding cash reserves of 100 shares while <a href=\"https:\/\/slashtraders.com\/en\/blog\/selling-naked-put-options\/\" target=\"_blank\" rel=\"noreferrer noopener\">selling a Put option<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">Let's check out the profit analysis of selling an OTM Cash Secured Put option. We receive a premium when selling a Put. As long as the stock price does not drop below the strike price before expiration, the <a href=\"https:\/\/slashtraders.com\/en\/blog\/options-value\/\" target=\"_blank\" rel=\"noreferrer noopener\">Put option value<\/a> expires worthless, and the premium received becomes our profit.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img fetchpriority=\"high\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/sell-cash-secured-put-profit.png\" alt=\"sell cash secured put profit\" class=\"wp-image-7241\" srcset=\"\" sizes=\"(max-width: 1024px) 100vw, 1024px\" data-srcset=\"\" \/><figcaption class=\"wp-element-caption\">Maximum profit of the Cash Secured Put option is the premium.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">The Put option will be exercised if the stock price drops below the strike price.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/sell-cash-secured-put-cost-per-share.png\" alt=\"sell cash secured put cost per share\" class=\"wp-image-7242\" srcset=\"\" sizes=\"(max-width: 1024px) 100vw, 1024px\" data-srcset=\"\" \/><figcaption class=\"wp-element-caption\">We are forced to purchase 100 stocks if the stock price drops.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">This means we are forced to purchase 100 stocks at the cost of the strike price less the premium received.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote is-layout-flow wp-block-quote-is-layout-flow\">\n<p class=\"wp-block-paragraph\">Cost per share = strike price - premium<\/p>\n<\/blockquote>\n\n\n\n<h2 class=\"wp-block-heading\">Advantages of Selling Cash Secured Puts<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">Selling Cash Secured Put options is part of the <a href=\"https:\/\/slashtraders.com\/en\/blog\/wheel-strategy-stock-picker\/\" target=\"_blank\" rel=\"noreferrer noopener\">wheel strategy<\/a>, and a good long-term strategy to <a href=\"https:\/\/slashtraders.com\/en\/blog\/stocks-to-buy-and-hold-forever\/\" target=\"_blank\" rel=\"noreferrer noopener\">buy and hold stocks<\/a>.<\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">In a bullish trend, we can continue to sell Cash Secured Puts for income through premiums. In a bearish trend, we would purchase the stocks at the strike price, which is lower than the original market price, then wait for the blue-chip stock to <a href=\"https:\/\/slashtraders.com\/en\/tools\/bull-put-spread-screener\/\" target=\"_blank\" rel=\"noreferrer noopener\">bounce back<\/a> in the future.<\/p>\n\n\n\n<table id=\"tablepress-33\" class=\"tablepress tablepress-id-33\">\n<thead>\n<tr class=\"row-1\">\n\t<th class=\"column-1\">Price trend<\/th><th class=\"column-2\">Outcome of Cash Secured Put<\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-striping row-hover\">\n<tr class=\"row-2\">\n\t<td class=\"column-1\">Bullish<\/td><td class=\"column-2\">Profit from premium<\/td>\n<\/tr>\n<tr class=\"row-3\">\n\t<td class=\"column-1\">Bearish<\/td><td class=\"column-2\">Buy 100 stocks at discount<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<!-- #tablepress-33 from cache -->\n\n\n\n<h2 class=\"wp-block-heading\">Can You Lose Money Trading Cash Secured Puts?<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">If the <a href=\"https:\/\/slashtraders.com\/en\/blog\/bear-call-spread-delta-hedge\/\" target=\"_blank\" rel=\"noreferrer noopener\">stock price crashes<\/a> after we sold the options, then the company never recovers to our purchase price, or even goes bankrupt, the maximum loss of our Cash Secured Put trade is buying worthless stocks at the strike price.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/maximum-loss-to-cash-secured-put.png\" alt=\"maximum loss to cash secured put\" class=\"wp-image-7256\" srcset=\"\" sizes=\"(max-width: 1024px) 100vw, 1024px\" data-srcset=\"\" \/><figcaption class=\"wp-element-caption\">If the company bankrupts, the maximum loss per share to the Cash Secured Put is the strike price minus premium.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">So we only trade Cash Secured Puts on <a href=\"https:\/\/slashtraders.com\/en\/blog\/best-blue-chip-stocks-dividends\/\" target=\"_blank\" rel=\"noreferrer noopener\">blue-chip stocks that we want to hold for a long time<\/a>.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full\"><a href=\"https:\/\/www.slashtraders.com\/en\/pricing\/?utm_source=blog&amp;utm_medium=banner\" target=\"_blank\" rel=\"noopener\"><img loading=\"lazy\" decoding=\"async\" width=\"971\" height=\"120\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/slashtraders-trial-banner.png\" alt=\"slashtraders trial banner\" class=\"wp-image-7387\" srcset=\"\" sizes=\"(max-width: 971px) 100vw, 971px\" data-srcset=\"\" \/><\/a><\/figure>\n\n\n\n<h2 class=\"wp-block-heading\">The Best Cash Secured Put Opportunities Now<\/h2>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">We can use the <a href=\"https:\/\/slashtraders.com\/en\/tools\/best-value-stocks\/\" target=\"_blank\" rel=\"noreferrer noopener\">Bullish Value Stocks<\/a> to find a list of financially strong companies that are currently undervalued.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">The list shows both Shopify and Facebook are extremely undervalued right now. They are great companies with profitable software platforms and huge competitive advantages:<\/p>\n\n\n\n<ul class=\"wp-block-list\">\n<li>Both companies have close to 100% Upside from their respective Fair Values.<\/li>\n\n\n\n<li>Plus the Long Signal Days indicator shows both stocks bottomed out last week.<\/li>\n<\/ul>\n\n\n\n<figure class=\"wp-block-image aligncenter size-full\"><img loading=\"lazy\" decoding=\"async\" width=\"934\" height=\"642\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/trending-bullish-stocks-shop-fb.png\" alt=\"trending bullish stocks shop fb\" class=\"wp-image-7269\" srcset=\"https:\/\/www.slashtraders.com\/wp-content\/uploads\/2022\/03\/trending-bullish-stocks-shop-fb.png 934w, https:\/\/www.slashtraders.com\/wp-content\/uploads\/2022\/03\/trending-bullish-stocks-shop-fb-300x206.png 300w, https:\/\/www.slashtraders.com\/wp-content\/uploads\/2022\/03\/trending-bullish-stocks-shop-fb-768x528.png 768w, https:\/\/www.slashtraders.com\/wp-content\/uploads\/2022\/03\/trending-bullish-stocks-shop-fb-18x12.png 18w\" sizes=\"(max-width: 934px) 100vw, 934px\" \/><figcaption class=\"wp-element-caption\">Both SHOP and FB are heavily undervalued stocks that we want to buy-and-hold for the long term.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">So we can trade Cash Secured Put options to SHOP and FB to earn income from the premium while anticipating an upward rebound.<\/p>\n\n\n\n<p class=\"wp-block-paragraph translation-block\">SHOP's market price is currently around $600, we can sell a Cash Secured Put at 0.20 <a href=\"https:\/\/slashtraders.com\/en\/blog\/option-greeks\/\" target=\"_blank\" rel=\"noreferrer noopener\">delta<\/a>, $495, that expires next month. The options trade will earn us an income of $19.40 per share.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/sell-shop-cash-secured-put.png\" alt=\"sell shop cash secured put\" class=\"wp-image-7261\" srcset=\"\" sizes=\"(max-width: 1024px) 100vw, 1024px\" data-srcset=\"\" \/><figcaption class=\"wp-element-caption\">Sell a 0.20 delta SHOP Cash Secured Put that expires next month to receive $19.40 premium per share.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">If the stock price drops, we have a chance to buy 100 shares of Shopify at $475.60, around 21% off the original price.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Meta's market price is currently around $200, a short Cash Secured Put at 0.20 delta, $175, that expires next month will receive $3.60 in premium per share.<\/p>\n\n\n\n<figure class=\"wp-block-image aligncenter size-large\"><img loading=\"lazy\" decoding=\"async\" width=\"1024\" height=\"576\" src=\"https:\/\/slashtraders.com\/wp-content\/uploads\/2022\/03\/sell-fb-cash-secured-put.png\" alt=\"sell fb cash secured put\" class=\"wp-image-7262\" srcset=\"\" sizes=\"(max-width: 1024px) 100vw, 1024px\" data-srcset=\"\" \/><figcaption class=\"wp-element-caption\">Sell a 0.20 delta FB Cash Secured Put that expires next month to receive $3.60 premium per share.<\/figcaption><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">If the stock price drops, we have an opportunity to buy 100 shares of FB at $171.40, around 14% off the original price.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Both Cash Secured Put trades give us the opportunities to buy stocks at a discount. Apart from the differences in discounts, we also notice the differences in cash buying power required for the two trades.<\/p>\n\n\n\n<table id=\"tablepress-34\" class=\"tablepress tablepress-id-34\">\n<thead>\n<tr class=\"row-1\">\n\t<th class=\"column-1\">Stocks<\/th><th class=\"column-2\">Discount on share<\/th><th class=\"column-3\">Cash needed<\/th>\n<\/tr>\n<\/thead>\n<tbody class=\"row-striping row-hover\">\n<tr class=\"row-2\">\n\t<td class=\"column-1\">SHOP<\/td><td class=\"column-2\">21% off<\/td><td class=\"column-3\">$47,560<\/td>\n<\/tr>\n<tr class=\"row-3\">\n\t<td class=\"column-1\">FB<\/td><td class=\"column-2\">14% off<\/td><td class=\"column-3\">$17,140<\/td>\n<\/tr>\n<\/tbody>\n<\/table>\n<!-- #tablepress-34 from cache -->\n\n\n\n<p class=\"wp-block-paragraph\">The SHOP trade requires $47,560 of cash to secure each Put option contract. While the FB Cash Secured Put option requires $17,140 of buying power per contract.<\/p>\n\n\n\n<p class=\"has-ast-global-color-4-background-color has-background wp-block-paragraph\"><a href=\"https:\/\/www.slashtraders.com\/en\/blog\/slashtraders-vs-sp500\/\" target=\"_blank\" rel=\"noreferrer noopener\">SlashTraders vs S&amp;P 500: 450% Outperformance, Verified Trades and How to Copy Every Alert<\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>The Cash Secured Put options strategy is part of the Wheel Strategy. You can sell Put options for income, and also buy blue-chip stocks at a discount.<\/p>","protected":false},"author":1,"featured_media":7299,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"site-sidebar-layout":"default","site-content-layout":"plain-container","ast-site-content-layout":"normal-width-container","site-content-style":"unboxed","site-sidebar-style":"unboxed","ast-global-header-display":"","ast-banner-title-visibility":"","ast-main-header-display":"","ast-hfb-above-header-display":"","ast-hfb-below-header-display":"","ast-hfb-mobile-header-display":"","site-post-title":"","ast-breadcrumbs-content":"","ast-featured-img":"","footer-sml-layout":"","ast-disable-related-posts":"","theme-transparent-header-meta":"default","adv-header-id-meta":"","stick-header-meta":"","header-above-stick-meta":"","header-main-stick-meta":"","header-below-stick-meta":"","astra-migrate-meta-layouts":"set","ast-page-background-enabled":"default","ast-page-background-meta":{"desktop":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"ast-content-background-meta":{"desktop":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"tablet":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""},"mobile":{"background-color":"var(--ast-global-color-5)","background-image":"","background-repeat":"repeat","background-position":"center center","background-size":"auto","background-attachment":"scroll","background-type":"","background-media":"","overlay-type":"","overlay-color":"","overlay-opacity":"","overlay-gradient":""}},"footnotes":"","_wp_rev_ctl_limit":"5"},"categories":[3],"tags":[56,12,64,22,14,48,11],"class_list":["post-7233","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-blog","tag-cn","tag-en","tag-es","tag-fb","tag-options","tag-shop","tag-tw"],"_links":{"self":[{"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/7233","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/comments?post=7233"}],"version-history":[{"count":5,"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/7233\/revisions"}],"predecessor-version":[{"id":14494,"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/posts\/7233\/revisions\/14494"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/media\/7299"}],"wp:attachment":[{"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/media?parent=7233"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/categories?post=7233"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.slashtraders.com\/en\/wp-json\/wp\/v2\/tags?post=7233"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}