Cash-Secured Put

A cash-secured put is an options strategy where you agree to buy 100 shares of a stock at a set price (called the strike price) by a future date, in exchange for collecting a premium (upfront payment). You keep enough cash on the sidelines to actually buy those shares if the deal gets exercised. You'll encounter this when selling put options—it's popular with investors who want extra income or who wouldn't mind owning a stock at a discount. For example, you might sell a put on TechCorp at $50 per share, collect $200 upfront, and hold $5,000 in cash just in case you're forced to buy 100 shares. It's less risky than naked puts because you have the cash ready.