Option Strategies

Cash-Secured Put

This strategy is widely known as a cash-secured put (sometimes shortened to "secured put"). You sell a put while holding enough cash to buy the shares if you are assigned.

In plain English

You post a standing offer: "I will buy this stock at $X if it falls to that price." Someone pays you for that promise. If the stock never drops, you keep the payment.

Good fit if

You want to own the stock at a lower price anyway and have the cash set aside to buy it.

Beginner mistake

Selling puts on a stock you would not actually want to own — assignment means you buy it for real.

On June 12, 2026, you do not own BAC shares, but you would be happy to buy them on a pullback. BAC is trading around $57.20. You would like to enter near $55. You submit a "Sell to open" order for 10 put options on the June 19, 2026 expiration at the $55 strike. Now two things will happen.

The premium is about $1.35 per share ($135 per contract). You receive $1,350 in cash up front ($135 * 10 contracts).
Your brokerage firm will ensure that you have at least $55,000 in cash or cash equivalents. Why? Because by selling put options you have given someone the right to sell you 1,000 shares of BAC at $55/share. Your broker wants to make sure you can live up to your obligation. That is where the name "cash-secured" comes into play.

If BAC stays above $55 through expiration, you keep the $1,350 and never buy the stock. If BAC is below $55 at expiration, you will likely be assigned and buy 1,000 shares at $55 — but your effective cost is reduced by the premium you collected (about $1.35 per share).

Illustrative premiums based on mid-June 2026 BAC option prices; live quotes will differ.