Naked put

A naked put (or short put) is selling a put option without setting aside the full cash to buy the shares if assigned. You collect premium upfront and profit if the stock stays above the strike at expiration. Loss is large but capped (stock can only fall to zero) , less risky than a naked call but still requires margin approval. The cash-secured put is the same trade with full collateral set aside.

Bias: Bullish to neutral Risk profile: Limited profit (premium), large but defined max loss (strike − premium) Ideal conditions: High IV rank, willingness to own the stock at the strike, strong support level

How it's constructed

• Sell 1 put option at a chosen strike and expiration
• Collect premium upfront
• Post margin (lower than naked call because max loss is bounded by stock going to zero)

Setup example

AAPL trades at $185 and you'd be happy to own it at $175. You sell the $175 put for $2.50.

• Premium collected: $250 per contract
• Breakeven: $175 − $2.50 = $172.50
• Max profit: $250 (if AAPL closes at or above $175)
• Max loss: $172.50 × 100 = $17,250 per contract (if AAPL goes to zero)

Max profit, max loss

Naked put vs cash-secured put

The risk is identical , only the capital posted differs. Naked puts are leveraged; cash-secured puts are not.

When to use a naked put

Best conditions:

• IV rank is elevated
• Strike is at a price you'd genuinely want to own the stock
• Strong technical support near the strike
• You have a plan to take assignment or roll if challenged

Related terms: Cash-secured put, put option, bull put spread, assignment, IV rank

Try it on Stryke: Use the Cash-Secured Put Screener to find high-yield put-selling candidates.

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