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Your first cash-secured put, step by step

Your first cash-secured put comes down to five steps: choose the stock and strike, check the cash, place the order, wait, and decide how it ends. Here's each one, with a hypothetical trade walked all the way through.

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

The short answer

1. Choose a stock you'd own, a strike you'd pay and an expiry with no earnings inside.
2. Check the cash: strike × 100 must sit in your account, and your broker must approve you for puts.
3. Place a "sell to open" order for one put, with a limit price.
4. Wait, with an exit order placed and the dates on your calendar.
5. Decide how it ends: close early, let it expire, or take the shares.

This is the first step of the wheel strategy. If the trade itself is new, read cash-secured put explained first. Doing a few on paper before using real money is a good habit.

Step 1: choose the stock, strike and date

The stock. Pick a company you'd be glad to own 100 shares of, with cash, through a bad month. Its options should trade actively, with a narrow gap between bid and ask.

The strike. Pick a price below today's that you'd truly pay. Many first-timers start with a Delta around 0.20 to 0.30. Our out-of-the-money puts guide shows how that sets your cushion.

The date. About 30 to 45 days out is a common start. Check the earnings date. If it falls before expiry, pick an earlier date or wait.

Here's our example (an illustration, not a trade idea). A made-up stock, XYZ, trades at $40. You'd buy it at $37. Earnings were two weeks ago. You look at puts 35 days out:

You choose the $37 put. The middle of bid and ask is $0.60.

Step 2: check the cash and permissions

Strike × 100 = $37 × 100 = $3,700. That cash must be free in your account. Ask:

• Is $3,700 of XYZ a size that fits my account and my risk rules?
• If XYZ fell 20% after I bought, could I hold it calmly?
• Am I approved to sell cash-secured puts? Most brokers call this a basic or low options level. Check your broker's help pages.

A Canadian note: cash-secured puts in a TFSA or RRSP depend on the broker. Covered calls are widely allowed in those accounts. Options permissions differ by broker, so check before you plan around one.

If any answer is no, stop here. Choose a cheaper stock or a lower strike, or wait.

Step 3: place the order

Open the options chain for XYZ, pick the 35-day expiry and the $37 put. Fill in the ticket:

Check the preview. It should show a credit of about $60 and about $3,700 held. If it says "buy" or "debit," stop and fix it.

If it doesn't fill in a few minutes, lower the price a cent or two. Don't use a market order on options; a wide spread can cost you on the fill.

Say it fills at $0.60. You collect $60. Break-even is $36.40.

Step 4: wait, with a plan

Right after the fill, place a buy to close order at about half the premium, $0.30, good till cancelled. If the put decays fast, it closes for you. See buy to close explained.

Then write on your calendar: the time-stop day (about 21 days before expiry), the expiry date and any dividend date. You don't need to watch every tick.

Here's what the trade can do by expiry:

Step 5: decide how it ends

One of three things happens:

1. The closing order fills early. You keep about $30, the cash is freed, and you can start again.
2. It expires worthless. XYZ stays above $37. You keep the full $60. Nothing else to do.
3. You're assigned. XYZ closes below $37 at expiry. $3,700 leaves your cash and 100 shares arrive. Your cost is $36.40 a share. Now you can sell a covered call above that cost.

Say XYZ ends at $34. You own 100 shares worth $3,400 that cost you $3,640 after the premium. You're down −$240 on paper. That's the trade working as designed: you bought a stock you wanted, at your price, and it kept falling for now.

If you'd rather close instead of being assigned, follow the rules you set. See cash-secured put exit rules.

Finally, write it all down: dates, strike, premium, how it ended and why. Our tax basics page explains why those notes matter later.

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