Short Put Calculator
Sell a put option and collect the premium up front. You keep it all if the stock stays above the strike, but you may have to buy the shares at the strike if it falls below.
Stock
Put you're selling
Calendar days to expiry: 30
Manual settings
Left blank, each option's IV is worked out from its premium.
Has only a small effect. Leave at 4% if unsure.
Example trade shown. Replace with your own numbers.
Profit / loss by stock price
Profit / loss over time
Values before expiry are estimates using Black-Scholes and the implied volatility worked out from your premium. Your broker will also require margin or cash to cover the trade, which isn’t shown here. Ignores closing fees, dividends and early assignment. For educational purposes only.
What is a Short Put?
A short put means selling a put option and collecting the premium up front. In return, you agree to buy 100 shares at the strike price if the buyer exercises, which usually happens when the stock finishes below the strike at expiry.
If the stock stays at or above the strike, the put expires worthless and you keep the whole premium. If it falls below, you'll usually be assigned the shares at the strike price. Your risk is similar to owning the shares, cushioned by the premium you received. A short put where you set aside the full cash to buy the shares is called a cash secured put. We have a separate calculator for that.
How to use this calculator
1. Enter the stock's current price. Adding the ticker symbol is optional.
2. Enter the strike price of the put you're selling, and the premium per share.
3. Set the expiry date, or type the number of days to expiry.
4. Enter how many contracts you're selling and any fees per contract.
The calculator updates as you type. You'll see:
- The premium you collect (your maximum profit), your maximum loss and your break-even price.
- Your return on risk, both for this trade and annualised.
- Your chance of making a profit and of keeping the full premium.
- Your profit or loss if the stock falls 10% by expiry.
- A chart of your profit or loss at different stock prices, today, at two dates in between, and at expiry. Hover over the chart (or tap it on a phone) to read exact values.
- A table of profit or loss by stock price and date, shown in dollars or as a percentage of your maximum loss.
You can find the premium in your broker's option chain. Use the mid-price between the bid and the ask for a realistic figure. Under "Manual settings" you can enter the implied volatility yourself, change the interest rate, or set the price range shown in the chart and table.
When is a Short Put a good choice?
- You're neutral to bullish on the stock and don't expect a big fall.
- You'd be happy to own the shares at the strike price if you're assigned.
- Implied volatility is higher than usual. Premiums are richer, so you're paid more for the same risk.
- You want time to work for you. As expiry gets closer, the put loses value, which is good for you as the seller.
When might it not suit?
- You expect the stock to fall sharply. Your losses grow much like owning the shares.
- You don't want to own the stock, or wouldn't have the money to buy it if assigned.
- There's a big event before expiry, such as an earnings report, unless you're comfortable with a large move.
Things to keep in mind
- Your maximum profit is the premium. Your maximum loss is the strike price minus the premium, if the stock went to zero.
- Your broker will require margin or cash to hold a short put, which ties up money. The calculator doesn't show this.
- You can be assigned before expiry, especially if the stock drops well below the strike.
- Many traders buy the put back early once they've captured most of the premium.
This calculator gives estimates for educational purposes only. It isn't financial advice. Option prices before expiry are modelled, and real prices will differ.