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Income strategyBeginner

Cash-Secured Put

Sell a put while holding cash – either keep the premium or buy the stock at your desired price.

When to use

When you want to buy a stock and are waiting for a dip. Improves returns vs. limit order.

Step-by-step

  1. 1

    Pick a stock you would buy at a discount

  2. 2

    Reserve cash equal to strike × 100

  3. 3

    Sell a put at your desired strike, 30–45 DTE

  4. 4

    If expires worthless → keep premium and repeat

  5. 5

    If assigned → buy shares at strike (effective price strike − premium)

Example

MSFT trades at 420 USD, you would happily buy at 400. Sell a 30-day 400 put for 5.50 USD (= 550 USD premium). If above 400 → keep 550 USD. If below → buy shares effectively at 394.50 USD.