Sell a put and hold enough cash to buy the shares if they are put to you. Two outcomes follow, and both are meant to be acceptable: the option expires and the credit is yours, or you are assigned and own the stock at the strike less the premium already received. That makes it an acquisition tool as much as an income one — but only if you would buy at that price with no premium attached, because assignment arrives exactly when the name is weakest. Price the strike and the days here and set the annualised yield against the cash the position has to leave idle.
One leg, but the ticket is really the leg plus the cash: most brokers will not let the order go live without the full strike value already set aside, which is what 'secured' means operationally rather than just economically. Selling further out of the money lowers both the premium and the odds of owning the stock; selling at the money maximizes premium collected per day at the cost of a near-even chance of assignment. If assignment is genuinely unwanted, this is the wrong strike to be selling, not a risk to manage after the fact.
The cash set aside earns money-market or sweep interest at most brokers while the position is open, which is a real part of the return and is easy to leave out of a quick premium-over-notional calculation. Selling the same strike repeatedly as it expires unassigned, and re-selling after assignment once the shares are owned, is the standard way this is run as an ongoing income position rather than a one-off trade. Account approval for this is typically the same tier as a covered call, since the risk profile — full downside of owning the stock, less a modest credit — is identical.
Common mistake. The common mistake is selling a put on a name you would not actually want to own, treating the premium as free money rather than as the price of a real, if discounted, purchase obligation.
| # | Action | Instrument | Strike |
|---|---|---|---|
| 1 | Sell | Put | 560 |
Computed from the same strikes and net premium as the worked example above — not a simulation, the closed-form payoff evaluated at each price.
| SPY at expiry | P&L |
|---|---|
| 500 | -$5440.00 |
| 520 | -$3440.00 |
| 540 | -$1440.00 |
| 560 | $560.00 |
| 580 | $560.00 |
| 600 | $560.00 |
| Strategy | Market view | Opened for | Legs vs. this one |
|---|---|---|---|
| Covered Call | Neutral to mildly bullish — income | Debit or credit | +1 |
| Bull Put Spread | Bullish to neutral — income | Credit | +1 |
| Protective Put | Bullish — hedged | Debit | +1 |
| Jade Lizard | Neutral to bullish — income | Credit | +2 |