Covered Put Calculator
A covered put shorts 100 shares and sells a put against them. It is the bearish mirror of a covered call: you collect premium and profit while the stock drifts down to the put strike, where your gain is capped — but a rally brings unlimited risk from the short shares.
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Key characteristics
- Short 100 shares + sell a put: income on a flat-to-falling stock.
- Max profit = (entry − put strike) × 100 + premium, reached at or below the put.
- Breakeven = short entry price + premium received.
- Unlimited risk to the upside — the short stock loses as the price rises.
When to use a covered put
Use it when you are mildly bearish on a stock you are already short, and you want to be paid while you wait for a slow decline. The short put adds premium income and defines the price at which your downside profit is capped.
It is the exact mirror of the covered call: instead of capping the upside of long shares, you cap the downside profit of short shares in exchange for a premium today.
Risks and management
The danger is a rally. Short stock has theoretically unlimited risk, and the small put premium barely cushions a sharp move up — treat this as a position that needs an exit plan and the borrow to stay short.
Many traders roll the short put down as the stock falls to keep collecting premium, and close the whole position if the trend turns up. Watch borrow costs and dividends, which you owe while short.
Calculate it live
Use the free OptionProfit Covered Put calculator to load a live option chain, build the trade, and instantly see the payoff chart, breakevens, probability of profit, Greeks and a Monte Carlo simulation of outcomes.
- The bearish mirror of a covered call: short stock + short put for income.
- Capped profit to the downside, breakeven just above the short entry.
- Unlimited risk to the upside — always have an exit and the borrow.
- Roll the short put down to keep collecting as the stock falls.
Frequently asked questions
How is a covered put different from a cash-secured put?
A cash-secured put is bullish — you sell a put hoping to buy stock cheaply. A covered put is bearish — you are short the stock and sell a put against that short position.
What is my maximum risk?
Unlimited. The short shares lose more and more as the stock rises, and the put premium only offsets a small part of it. It is not a defined-risk trade.
Why short the stock instead of just selling a call?
A covered put expresses an existing short-stock view with added income. If you only want defined-risk bearish exposure, a put or a bear spread is usually safer.
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