How Much Can You Lose Selling a Cash-Secured Put?

The maximum loss on a cash-secured put is the strike price minus the premium received, times 100 shares — realised only if the stock goes to zero.

The payoff at expiry

Draft to cover: profit capped at premium; loss grows below strike − premium; breakeven = strike − premium.

Worked example

Draft to cover: sell the $50 put for $1.50 → max loss $4,850, breakeven $48.50, max profit $150.

"Cash-secured" means the loss is funded, not smaller

Draft to cover: collateral vs risk; comparison with naked puts and covered calls (same payoff shape).

How assignment changes the picture

Draft to cover: owning shares at the strike; cost basis = strike − premium; when assignment is acceptable.