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All-StarsBullish to Neutral
Short Put
Overview
Selling a put option without shorting the underlying stock. You collect premium hoping the stock stays above the strike. If assigned, you buy the stock at the strike. Similar to cash-secured put but may use margin instead of cash.
Max Profit
Limited to: Premium received
Max Loss
Strike Price × 100 - Premium received (substantial, to near zero)
Breakeven
Strike Price - Premium received
Structure
Short 1 Put (naked/uncovered)
Risk Profile
Limited profit (premium). Substantial risk (stock could theoretically go to zero).
When to Use
When you're bullish and willing to buy the stock if assigned. When IV is high. Requires margin if not cash-secured. Common strategy for entering stock positions.