How to Calculate Annualized Return on a Cash-Secured Put

1. Put the inputs on the same basis

Use one standard 100-share put. Quotes are per share; premium and collateral below are per contract. DTE means calendar days to expiration, not trading sessions. Shortput excludes 0DTE from this calculation.

1. Find the strike, bid, ask and DTE for the same contract.
2. Calculate mid = (bid + ask) / 2. It is a reference, not a promised fill.
3. Multiply mid by 100 for premium, and strike by 100 for gross cash required.

2. Calculate period return, then annualize

Hypothetical example: a $95 strike put has a $1.40 bid, $1.60 ask and 30 DTE. Mid is $1.50, so the reference premium is $150 and gross cash required is $9,500. Shortput does not subtract premium from this cash denominator.

The 365 / 30 multiplier puts different durations on a common scale. It does not compound returns or assume you can repeatedly find the same trade for a year.

Period ROI = 150 / 9,500 × 100 = 1.58%
Annualized ROI = 150 / 9,500 × 365 / 30 × 100 = 19.21%

3. Check what ROI does not measure

At expiration, this put’s profit or loss is $150 − max($95 − stock price, 0) × 100, before costs. At a stock price of $80, the result is a $1,350 loss—not a 1.58% gain. The breakeven is $93.50; a fall to zero would lose $9,350.

The premium is the maximum option profit before costs, not guaranteed net income. An American-style put may be assigned before expiration. Commissions, closing costs, interest and the cash impact of assignment are outside the displayed ROI.

Use the cash basis in Shortput

Select Cash secured ROI above the matrix. Each cell pairs simple annualized ROI with premium per contract. Open a cell to check its bid, ask and cash required; if quotes are invalid or too old, a missing ROI is not a zero return.