Cash-secured put calculator: cash set aside, break-even and cushion
A short put is a promise to buy shares at the strike, with the cash already set aside. See what that promise looks like in numbers: the cash, the break-even, how far the stock can fall, and what assignment would mean.
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How it works: selling a cash-secured put means you agree to buy 100 shares per contract at the strike if the stock is below it at expiry, and you set the full purchase price aside in cash. Cash set aside = strike × 100 × contracts. Break-even = strike − premium; that is also your price per share if you get assigned. Cushion = how far the stock can fall from today before the assigned shares are under water. Premium as a share of cash = premium ÷ strike. Expiry only; fees left out. An illustration of the math on your inputs, not a trade idea.
What "getting assigned" means for you
If the stock closes below the strike at expiry, the shares are yours at the strike, whatever the stock is doing by then. The premium lowers your price a little; it does not stop the fall. In the example you'd own shares at $44 each — and if the stock is at $35, you're holding a $9 paper loss per share from day one. That is the real risk of a short put, and it is why the strike should be a price you'd actually be glad to pay. More in the cash-secured put, explained and options assignment, explained.
Where this fits in the wheel
The put is the first leg of the wheel strategy: sell a put, maybe get assigned, then sell calls on the shares. Every leg starts from the cash you set aside here, so size it from that number, not from the premium. One note for Canadian readers: covered calls are widely allowed in a TFSA or RRSP, but cash-secured puts depend on the broker, and options permissions differ by broker everywhere — check yours before you plan around it.
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