Cash-Secured ROI vs Estimated Margin ROI
Set the position size before chasing the percentage. Cash-secured and estimated margin ROI divide the same premium by different capital amounts; neither changes the purchase obligation.
Same contract, different denominators
Hypothetical inputs: stock $100, put strike $95, mid $1.50 and 30 DTE. One standard contract represents 100 shares and $150 of reference premium. Both ROI figures below use simple annualization and the same premium.
| Capital basis | Capital | Premium | Annualized ROI |
|---|---|---|---|
| Cash secured | $9,500 | $150 | 19.21% |
| Estimated margin | $1,650 | $150 | 110.61% |
How Shortput estimates margin
For a standard put, Shortput uses the larger of two capital terms, then adds premium. Here, the first term per share is 20% × $100 − ($100 − $95) = $15; the second is 10% × $95 = $9.50. The model therefore gives $15 × 100 + $150 = $1,650.
Credit = mid × 100
Cash = strike × 100
Margin estimate = 100 × max(0.20 × spot − max(spot − strike, 0), 0.10 × strike) + credit
Annualized ROI = credit / selected capital × 365 / DTE × 100The estimate is not your broker’s buying-power requirement
This is a comparison convention, not an account-specific margin quote. Broker house rules, position concentration, portfolio offsets and changing market conditions can change actual requirements. The model does not know your account. Confirm requirements with your broker before placing an order.
At the same $95 strike, assignment still means buying 100 shares for $9,500, even if the model shows $1,650 of margin. If the stock reaches zero, the option’s loss after the $150 premium is $9,350 before costs. Margin is collateral, not a maximum-loss boundary.
Compare both views before interpreting the percentage
Shortput starts with Est. margin ROI. Switching to Cash secured ROI changes only the return denominator—not the bid, ask, premium or OI. If a return looks unusually large, inspect DTE and the capital basis first. A higher ratio is not a recommendation.
Use it in the decision
The model’s $1,650 is not the $9,500 share-purchase budget. If the resulting holding is too large or cannot be funded, skip the position rather than rely on the higher margin ROI.