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Cash-secured put break-even: the strike minus the premium

The break-even on a cash-secured put is the strike minus the premium you collected. A $45 put sold for $1.00 breaks even at $44. Below that price, the trade is losing money. Here is why, and what it means once you're assigned.

Options guide · 5-minute read · Updated 2026-10-26

The formula

Break-even = strike − premium.

If you're assigned, you buy 100 shares at the strike. The premium you already collected is money in hand, so your true cost per share is the strike minus that premium.

If the stock sits exactly at that price, you have neither made nor lost anything. Above it, you're ahead. Below it, you're behind.

A worked example (an illustration, not a trade idea)

XYZ trades at $50. You sell one 30-day $45 put for $1.00.

• Premium: $100.
• Cash set aside: $4,500.
• Break-even: $45 − $1.00 = $44.

The $44 row is the break-even. Every dollar below it costs you $100 on the 100 shares.

What break-even means after assignment

Once the shares arrive, $44 becomes your cost basis for thinking about the position. It is the price you need the stock to get back to before you're whole.

Many people then sell a Covered call on those shares, which is the second half of the wheel strategy. Each call premium lowers that number a little more. Sell a $47 call for $0.50 and your break-even moves to $43.50.

But see the trap: if XYZ is at $38, a $47 call pays almost nothing. A $40 call pays more, but if it's called away at $40 you lock in a $400 loss against a $44 cost. Break-even tells you where you stand. It doesn't tell you the stock will come back.

Break-even is not a floor

The word "break-even" sounds like a safety line. It isn't. It's the point where the loss starts, not where it stops.

Below $44, the loss keeps growing until the stock hits zero. See cash-secured put max loss for the full table. On a $45 put, break-even is just $1 under the strike. That's 2% of cushion. A normal bad week can eat it.

Break-even across three strikes

The higher the strike, the more premium it pays, and the closer its break-even sits to today's price. Same made-up XYZ at $50, same 30 days, hypothetical premiums:

Check the top row: assigned at $48, shares worth $40, so −$800 on the shares, plus $180 of premium, is −$620. The bigger premium did not make the trade safer. It moved the break-even up, closer to where the stock already is.

Break-even versus just buying the shares

The other way to compare: what if you bought 100 shares at $50 today instead of selling the $45 put?

The share buyer breaks even at $50. The put seller breaks even at $44. That $6 head start is real, and it shows in the first two rows. The price of it is the last row: the put seller's gain stops at $100, however far the stock runs.

So a lower break-even is not free. You pay for it with a ceiling. Whether that's a good deal depends on whether you wanted the stock at $45 in the first place.

Using it before you sell

Before you place the order, ask one question: would I buy 100 shares at the break-even price today?

If XYZ is $50 and the break-even is $44, that's a 12% discount from today. If yes, the put makes sense. If you'd only want it at $38, sell a lower strike, collect less, and accept you'll rarely be assigned. The strike-picking page covers that trade-off: picking the strike for a cash-secured put.

Then write the break-even in your journal next to the trade. When the shares arrive, you'll already know the number that matters.

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