Short Put¶
A short put is an options position created by selling a put option, which obligates the seller to purchase 100 shares of the underlying stock at the strike price if the buyer exercises. The seller collects a premium upfront and profits if the stock remains at or above the strike price through expiration. Maximum profit is capped at the premium received; maximum loss occurs if the stock falls to zero.
HOW IT WORKS¶
The payoff at expiration is calculated as:
Profit = Premium Received − Max(0, Strike Price − Stock Price at Expiration)
The breakeven price equals the strike price minus the premium received. If the stock closes at or above the strike, the put expires worthless and the seller keeps the full premium. If the stock closes below the strike, the seller is assigned and must buy shares at the strike price, with the premium partially offsetting the loss. Short puts require margin; a naked short put uses margin collateral and carries margin call risk, while a cash-secured put sets aside the full purchase amount in cash.
IN TAPEBOARD¶
Tapeboard displays short put positions with real-time P&L, breakeven price, and days to expiration in the positions panel. The payoff diagram updates live as the underlying moves, showing the flat profit zone above the strike and the declining loss curve below it. Traders can set exit alerts at a target premium reduction — for example, closing at 50% of max profit — directly from the position card. Margin requirements and assignment risk flags surface automatically when a position moves in the money.