Estimate income potential and effective cost basis for selling puts.
A Cash-Secured Put generates income while you wait to buy a stock at a discount. You must hold cash equal to the strike price multiplied by 100 shares per contract.
Premium Income
1.79% Return on Capital
Capital Required (Cash)
$14,000
Locked until expiry
Annualized Return
21.7%
If unassigned
Effective Purchase Price
$137.50
Discount to Current Price
-$12.50 (8.3%)
Assignment Scenario
If the stock drops below $140.00 at expiration, you will be forced to buy 100 shares. However, because you kept the premium, your actual breakeven cost basis is only $137.50 per share.
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