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Cash-secured put max loss: the strike minus the premium, times 100

The max loss on a cash-secured put is the strike price minus the premium, times 100. On a $45 put sold for $1.00, that is $4,400. It happens if the stock goes to zero, and the path there is what this page shows.

Options guide · 6-minute read · Updated 2026-10-26

The formula

Max loss = (strike − premium) × 100.

You promised to buy 100 shares at the strike. The worst case is those shares being worth nothing. The premium is the only thing you got in return, so it comes off the top.

That is the same worst case as buying 100 shares outright at the strike, minus a small premium. A cash-secured put is not a smaller risk than owning the stock. It is owning the stock, with a head start of one premium.

The full table (an illustration, not a trade idea)

XYZ trades at $50. You sell one 30-day $45 put for $1.00. You collect $100. Your broker sets aside $4,500.

Read the right column from the bottom up. The gain stops at $100 no matter how high XYZ goes. The loss grows by $100 for every $1 the stock falls below $44, all the way to $4,400.

Why the premium barely matters at the bottom

People hear "the premium cushions you" and picture a soft landing. Look at the $30 row. The stock fell 40% from where you sold the put. The premium covered $100 of a $1,500 loss. The other $1,400 is yours.

The premium moves your break-even by $1. It does not move the floor. The floor is zero.

A stock does not have to go to zero to hurt

Max loss is the headline number, but it is rare. The common loss looks like the $40 or $30 row: the stock drops hard, you are assigned, and you own shares that keep sliding.

Say you take the shares at $40 and XYZ keeps going. Each row below is a month later:

The put ended in month zero. The loss didn't. This is why we say to size a cash-secured put as if you were buying 100 shares today, because the moment it's assigned, you have. The full walk-through is in cash-secured put example.

How to use the number

Before you sell any put, write down three figures:

1. Cash set aside: strike × 100. This is what you're really putting at risk, not the premium.
2. Max loss: (strike − premium) × 100. Ask whether your account survives it.
3. Your real exit: the price where you'd sell the shares if assigned and the stock kept falling. The loss at that price is the one to size by. For most people it is far above zero and far below the strike.

If line 3 is a loss you wouldn't accept on a plain stock purchase, don't sell the put. This is the sizing rule inside the wheel strategy, and it's the one that keeps a bad month from becoming a bad year.

Max loss vs a spread

If $4,400 is too much, a put spread caps it. You sell the $45 put and buy a $40 put. The most you can lose is the $5 width minus the net premium, times 100. But the premium is smaller, you don't get the shares at a discount, and it's a different strategy with its own page: vertical spreads explained.

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