Outlook: Neutral-bullish income. Taught in full in Lesson 21, Cash-secured puts: get paid to wait. This page is the reference card.
Illustration, not a recommendation. The strikes and premiums on this page are fixed teaching figures, not live quotes, and no strategy suits every account or every market. Read the full disclaimer.
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What you must believe
You want the stock at a lower price and are happy to be paid while waiting. The obligation to buy must read as good news, or this is the wrong page.
Construction
Reliance at ₹1,400. Sell the monthly 1,350 PE at ₹18 (₹9,000) with the full ₹6,75,000 purchase amount reserved. Effective entry if assigned: ₹1,332.
The numbers, before entry
Max profit: ₹9,000, anywhere above 1,350 at expiry
Max loss: large; ₹66,000 underwater already at 1,200, growing all the way down
Margin: ~₹1.2 to ₹1.4 lakh demanded; the honest version keeps the full ₹6.75L idle
Greeks profile
Short put = positive delta, short gamma, long theta, short vega. Fear pays you more premium precisely because fear is sometimes right.
Realistic expectations
High win rate by construction: three quiet expiries out of four at a 0.25-delta strike. The losses, when they come, are stock-sized. The strategy is a shopping plan with income, and it stays one only at cash-secured size.
Management rules
Only on stocks passing the ownership test, at strikes below real support
Take 70 to 80% of the premium early rather than holding through expiry-week gamma
Assignment is phase two, not failure: the wheel plan should predate the trade
With other strategies
With the covered call it forms the wheel: assignment hands you the shares the call side then rents out
Buy a lower put against it and it becomes a bull put credit spread: the defined-risk version for accounts that cannot reserve ₹6.75L (Lesson 22)
Skew (Lesson 19) is its structural tailwind: put sellers harvest the fat side of the fear premium, which is why this out-earns the covered call at equal distance
A far protective put underneath turns catastrophic tail risk into a fixed band while keeping most of the income: a poor man's put ladder
Common mistakes
Selling puts on stocks you never wanted, for premium that was pricing real risk
Sizing by the ₹1.3L margin instead of the ₹6.75L obligation: the classic account killer
Selling into a crash because the premium tripled; it tripled for a reason