A cash-secured put is an options strategy where the seller writes a put option while holding enough cash to purchase the underlying stock at the strike price if assigned. The seller receives a premium upfront in exchange for the obligation to buy the stock at the strike price if it falls below that level before expiration. The strategy is functionally equivalent to placing a limit buy order and getting paid to wait.
The maximum profit is the premium received. The maximum loss is the strike price minus the premium (if the stock goes to zero). Break-even is the strike price minus the premium received. Cash-secured puts work best in range-bound or mildly bullish markets on stocks the investor wants to own at lower prices. They are a core component of volatility harvesting strategies because they systematically capture the gap between implied volatility (what the market expects) and realized volatility (what actually happens) — implied volatility is structurally overpriced roughly 85% of the time.
Cash-secured puts are the most conservative options strategy after covered calls. The seller agrees to buy a stock at a specified price (the strike) within a set timeframe. In exchange, they collect a premium upfront. If the stock stays above the strike, the premium is pure income. If it falls below, the seller buys at an effective price below the current market — a discount they chose in advance.
Closelook uses cash-secured puts in the Derivatives portfolio to build positions in high-conviction names at lower prices. The strategy works best in elevated-volatility environments where option premiums are rich. Combined with the Market Regime scoring system, puts are sold when volatility is high but the structural thesis remains intact — turning fear into income.
Cash-secured puts pair naturally with Covered Calls (sell puts to enter, sell calls on the position), the Kelly Criterion for sizing, and the VIX for timing premium-rich environments.
