Home › Guides › Options: cash-secured puts

How much cash does a cash-secured put really need?

A cash-secured put needs the strike price times 100 in cash, locked in your account until the put is closed, expires or is assigned. A $45 put needs $4,500. If your broker asks for less, you are not selling a cash-secured put.

Options guide · 7-minute read · Updated 2026-10-26

The number: strike × 100

One put contract covers 100 shares. If you're assigned, you buy all 100 at the strike. So the cash you need is the full cost of those shares.

The premium you collect does not reduce this on most brokers. You sell a $45 put for $1.00, you get $100, and $4,500 is still locked. Some brokers net the premium against the requirement. Check your own.

What "set aside" means in practice

The cash doesn't leave your account. It stops being spendable. Your "buying power" or "cash available to trade" drops by $4,500. The money is still yours and still earns whatever your broker pays on cash, if anything.

It stays locked until one of three things happens:

• The put expires worthless. The cash is released.
• You buy to close. The cash is released.
• You're assigned. The cash is spent on the shares.

If you have $5,000 and sell one $45 put, you have $500 left to do anything else with for the next month. That's the real cost of the trade, and it's why sizing starts from the strike, not the premium.

Why "secured" is the whole point

A put sold without the cash behind it is a naked put. Your broker lends you the difference, under a margin requirement that can change daily. If the stock drops, the requirement grows, and the broker can demand more cash or close the position for you, at the worst moment.

A cash-secured put has none of that. The worst case is already paid for. The stock can go to zero and the broker never calls, because the $4,500 was there from day one. The margin version has its own page with the numbers. Short version: the margin version is a different trade with a different worst case.

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

You have $6,000 in a cash account. XYZ trades at $50. You sell one 30-day $45 put for $1.00.

Now XYZ falls to $38 at expiry and you're assigned.

You lost $600 out of $6,000, which is 10% of the account on one trade. Nothing broke, no one called, you simply own shares that fell. But 10% in a month is a lot. The put wasn't "small" because the premium was $100. It was 75% of the account, because the strike was $4,500.

Sizing for your account

The question isn't "can I afford the cash set aside?" It's "can I afford to own 100 shares of this at the strike, and watch them fall 20%?"

A few rules of thumb that fit the wheel strategy:

1. One put should not be most of your account. If a single strike × 100 is more than a third of your cash, the stock is too expensive for the account, however good the premium looks.
2. Keep some cash free. If every dollar is set aside, you can't buy to close, can't roll, and can't take any other trade. Keep 20% or so unlocked.
3. Know your loss at the exit price. Decide where you'd sell the shares if assigned and the stock kept dropping. The loss at that price is the real size of the trade.

Under $5,000, most single stocks are too big for one put. Cheaper stocks and some ETFs bring the strike down, but a cheap stock is often cheap for a reason. The page on cash-secured puts on ETFs walks through the capital for the big index funds.

Account types and brokers

Most US brokers allow cash-secured puts in a cash account at a basic options level. Robinhood, Fidelity, Schwab and tastytrade each have their own level names; apply for the one that includes "cash-secured puts" or "selling puts, cash-secured."

In Canada, Questrade, IBKR and Wealthsimple differ on what they allow in a TFSA or RRSP. Covered calls are widely allowed in registered accounts; cash-secured puts are allowed at some brokers and not others. Check before you fund the account for this purpose.

Retirement accounts in the US (IRA, Roth IRA) generally allow cash-secured puts but not margin, which is a good fit: the cash must be there.

Questions