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Options Strategy
Cash-Secured Puts
Sell a put, hold the cash to buy if assigned. It's often pitched as free income — the truth is more nuanced.
NoVo Options Trading · 2026
A cash-secured put is selling a put option while setting aside enough cash to buy the 100 shares if you're assigned. You collect the premium upfront. If the stock stays above the strike, the put expires worthless and you keep the premium; if it drops below, you buy the shares at the strike (minus the premium you collected).
"Getting paid to set a limit order"
The appeal: if you wanted to buy the stock at a lower price anyway, selling a put at that strike pays you a premium to wait. If assigned, you get the shares at a price you liked, effectively discounted by the premium. If not, you keep the premium as income. It's a limit order that pays you to sit.
The real risk
The catch is what happens in a crash. If the stock plunges well below your strike, you're obligated to buy at the strike — far above the new market price. The premium is a thin cushion against a large loss. Your max loss is nearly the full value of the position (strike minus premium, if the stock goes to zero) — the same downside as owning the stock, minus the premium.
A cash-secured put is bullish. In a real selloff, "getting paid to buy the dip" becomes "obligated to catch the knife."
Where it fits
It suits a genuine willingness to own the stock at the strike, with the cash truly set aside — not as "free money." Like covered calls, it's a premium-selling strategy where time decay works for you and your upside is capped at the premium. Respect the assignment obligation before the yield tempts you.
More on this: What Is a Cash-Secured Put? Getting Paid to Buy Lower
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NoVo is a software tool for market analysis and for executing trades you initiate, not financial advice. This article is general education, not investment advice. Options trading involves substantial risk of loss, up to and including your entire capital. NoVo makes no guarantee of profit, win rate, or performance, and past results do not predict future outcomes. You are responsible for your own broker account, configuration, and trading decisions.