Cash-Secured Puts

A cash-secured put means selling a put while holding enough cash to buy the shares if assigned. Here is how it works, why some investors use it to buy stocks at a discount and the risk they take.

Getting paid to wait

Selling a put obligates you to buy 100 shares at the strike if assigned. In a cash-secured put, you set aside the full amount needed. Investors use it to collect premium while waiting to buy a stock they already want, at a price below today’s.

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