PaterCapitalpronounced PAH-ter
← Back to strategy library
Options · Uncovered

Short Put

A premium-selling approach with assignment risk and substantial downside exposure.

BullishAdvanced
Strategy mechanics

What the structure is designed to do.

Selling an uncovered put creates an obligation to buy the underlying at the strike price if assigned. The premium is received up front, but the position can lose substantially if the underlying falls.

This is not a defined-risk structure. It requires sufficient buying power, a clear assignment plan and position sizing that assumes the underlying can move far beyond the expected range.

Risk check

This page is educational. Suitability depends on your objectives, experience, portfolio and ability to absorb loss.

Read the OCC options disclosure
Payoff profileShort Put
At expiration
Swipe horizontally to read the full chart.
Short Put payoff profile Profit is capped at the premium; loss increases as the underlying falls toward zero. Ashort put PROFIT LOSS UNDERLYING PRICE
At expiration

Profit is capped at the premium; loss increases as the underlying falls toward zero.

The setup
  1. Sell one put at strike A
  2. Hold sufficient buying power for assignment
  3. Define an exit and assignment plan before entry
Decision map

Know the trade-offs before entry.

When it fits
A bullish outlook and a genuine willingness to own the underlying at an effective price below strike A.
Break-even
Strike A minus the premium received.
Maximum profit
The premium received at entry.
Maximum loss
Substantial: strike price minus premium if the underlying falls to zero.
Time decay
Generally positive for the option seller.
Primary risk
Assignment and large losses during a sharp decline.
Need this adapted to your workflow?

Turn the structure into explicit rules.

Discuss automation