The Basic Breakeven Formula
Breakeven at Expiration = Strike Price - Premium Received
Example: You sell a $100 put for $3.00.
This is the formula you'll see everywhere, and it's correct for the simplest case. But real trading is more complex.
Breakeven Including Commissions
Most brokers charge $0.50-$0.65 per contract for options. This is small but adds up:
Adjusted Breakeven = Strike Price - Premium Received + (Commission / 100)
Example: $100 put, $3.00 premium, $0.65 commission.
For a single contract, commissions barely matter. But if you're selling 10 contracts per month for a year, you're paying $78 in commissions. That's meaningful on a small account.
If assigned, there's often a separate assignment fee ($0-$5 per contract depending on broker):
Breakeven with assignment = Strike - Premium + (Open Commission + Assignment Fee) / 100
Breakeven as a Percentage
Converting breakeven to a percentage shows how much cushion you have:
Downside Cushion = (Current Stock Price - Breakeven) / Current Stock Price × 100
Stock at $105, breakeven at $97:
The stock can drop 7.6% before you start losing money. This percentage is more useful than the dollar amount because it lets you compare across different stock prices.
Breakeven After Rolling
Rolling a cash secured put changes your breakeven because you're collecting additional premium. Here's the formula:
Adjusted Breakeven = New Strike Price - (Original Premium + Roll Credit)
Example: You sold the $100 put for $3.00. The stock dropped, and you roll to the $95 put for a $1.50 net credit.
You've improved your breakeven from $97 to $90.50 by rolling. However, you've extended your time in the trade and moved to a lower strike.
If the roll results in a debit instead of a credit:
Adjusted Breakeven = New Strike Price - (Original Premium - Roll Debit)
Example: Roll to $95 for a $0.50 net debit.
Rolling for a debit is rarely worth it. You're paying to extend a losing trade.
Breakeven for Multiple Rolls
Some traders roll the same position multiple times. Track cumulative premium:
| Trade | Premium/Credit | Cumulative |
Final breakeven = $92 - $5.30 = $86.70
After two rolls, you've lowered your breakeven by $10.30 from the original $97. But you've also been in this trade for potentially 3+ months and have capital tied up.
Breakeven Including Tax Impact
In a taxable account, the premium you collect is taxed as short-term capital gains. Your after-tax breakeven differs:
After-Tax Breakeven = Strike Price - (Premium × (1 - Tax Rate))
At a 32% federal + 5% state tax rate:
The tax bite reduces your effective cushion from 3% to 1.9%. In IRAs and 401(k)s, this doesn't apply — your breakeven is the straightforward formula.
Breakeven at Different Points Before Expiration
At expiration, breakeven is clean. Before expiration, it's more complicated because the put still has time value. If you want to close early at breakeven:
Close-at-Breakeven Price ≈ Strike Price - Premium + Current Put Value
If you sold the $100 put for $3.00 and it's now worth $1.50 with 15 days left, closing now would net $1.50 profit ($3.00 - $1.50). To break even on an early close, the put would need to be worth $3.00 (the price you sold it for), which means the stock would need to be at roughly your original breakeven level.
In practice, most sellers focus on the expiration breakeven and use percentage-of-premium targets (close at 50% profit, 200% loss) rather than calculating mid-trade breakevens.
Quick Reference Table
| Scenario | Formula |
OptionsPilot automatically calculates breakeven for every position, including after rolls and commissions, so you always know exactly where you stand.
Bottom Line
Breakeven on a cash secured put is straightforward at its core but has important nuances when you factor in rolling, taxes, and commissions. Always know your breakeven before entering a trade, and track it through any adjustments. The number that matters most is your downside cushion percentage — it tells you how much the stock can fall before you're in trouble.