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Cash-Secured Put

BTC is at 97,000. You want to buy it, but not here. You'd love an entry at 90k. Instead of setting a limit order and waiting, you sell the 90,000 put for 3,200 and set aside the cash to cover assignment.

Two things can happen. BTC stays above 90k, and you keep the 3,200. Or BTC drops below 90k, and you buy it at an effective price of 86,800 (90k strike minus 3,200 premium). Either way, you got paid to wait for the price you wanted.

What You Do​

The SetupYou receive premium
Sell1 put at your target buy price (the strike)
Max Profit
Premium
Max Loss
Strike - premium
Breakeven
Strike - premium
Margin
Cash = strike

How the P&L Works​

Binary outcome at expiry. Clean and simple.

  1. Above the strike. The put expires worthless. You keep the full 3,200. Rinse and repeat next cycle.
  2. Below the strike. You're assigned. Your effective entry is strike minus premium. If BTC only dips to 88k, you still come out ahead versus buying spot at 97k. But if it drops to 65k, you're holding a 90k obligation on a 65k asset. The premium doesn't save you from a real crash.

Worked Example​

BTC is trading at 97,000. You sell the 90,000 put expiring in 21 days for 3,200. At 58% IV, that's a 20-delta put. You set aside 90,000 in USDC.

BTC at Expiry
Put Payoff
Net P&L
Result
$105,000
$0
+$3,200
Keep premium, no fill
$93,000
$0
+$3,200
Keep premium, no fill
$90,000
$0
+$3,200
At the money, keep premium
$88,000
-$2,000
+$1,200
Assigned, still net positive
$86,800
-$3,200
$0
Breakeven
$72,000
-$18,000
-$14,800
Significant loss

At 88k, you're assigned but your effective entry is 86,800. You bought the dip and got paid to do it. At 72k, the math stops being fun.

Explore the Payoff​

Spot at Expiry$100k
$70k$130k
Premium Received$5k
$1k$15k
BE $95k$0+$5k-$25k$70kK $100k$130kSpot Price at ExpiryP&L
Settlement
$100k
P&L
+5.0k
Max Loss
Substantial
Max Gain
+$5k

When to Use​

  • You genuinely want to own BTC, ETH, or HYPE at a lower price. If you'd hate to be assigned, this isn't your trade
  • You're willing to sit in cash and get paid for patience instead of chasing entries
  • You think the underlying will trade sideways or up over the next few weeks
  • IV is elevated. After a selloff, put premiums spike. That's when you want to be selling them, not buying them

The wheel strategy sounds like free money until the underlying drops 40% and you're assigned at a price that looked safe three weeks ago. Ask anyone who sold puts on LUNA.

Common Mistakes
The mistakeSelling puts on an asset you wouldn't actually want to own, just because the premium is high.
The realityHigh premium means high risk. The market is telling you something. If you're selling puts on a token you'd never hold spot, you're picking up pennies in front of a steamroller. Only sell puts on assets you'd buy outright at the strike.
The mistakeTreating the premium as 'free income' without accounting for assignment risk.
The realityIf you sell the $90k put for $3,200 and BTC drops to $60k, you've lost $26,800 net. That's 8x the premium. The risk/reward on a naked short put is inherently asymmetric against you.
The mistakeSelling puts right into a downtrend because 'it's already dropped enough.'
The realityCatching a falling knife with short puts is how accounts blow up. If BTC drops 20% in a week, IV is elevated for a reason. Wait for a capitulation wick and some stabilization before selling puts. The premium will still be there.
💡

A cash-secured put is a covered call wearing different clothes. Put-call parity makes them identical P&L.

Greeks at a Glance​

Greek
Sign
Plain English
Delta
+
Slightly bullish. A short 25-delta put gives you +0.25 delta exposure. You profit when the underlying goes up.
Gamma
-
Delta moves against you on a drop. As BTC falls toward your strike, your effective long exposure increases right when you don't want it to.
Theta
+
Time decay earns you money every day. A 21-day $3,200 premium decays roughly $150/day (accelerating near expiry).
Vega
-
Rising IV hurts. If vol spikes from 55% to 80% after you sell the put, the mark-to-market loss will exceed several days of theta.

Theta is your paycheck. Vega is the risk you underestimate. They fight each other every day.

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