To calculate cash secured put income, divide the premium collected by the total cash required (strike price × 100), then annualize by multiplying by (365 ÷ days to expiration). A $3.00 premium on a $100 strike put with 30 days to expiration yields 3.0% per trade, or approximately 36.5% annualized.

The Core Formulas

Per-trade return:

  • Return = (Premium Collected ÷ (Strike Price × 100)) × 100
  • Example: $2.50 premium ÷ $5,000 cash committed = 5.0%

    • Annualized return:

  • Annualized = Per-trade Return × (365 ÷ Days to Expiration)
  • Example: 5.0% × (365 ÷ 30) = 60.8% annualized

    • Monthly income estimate:

  • Monthly = Premium × (30 ÷ Days to Expiration) × Number of Contracts
  • Example: $250 × (30 ÷ 30) × 2 contracts = $500/month

    • Real-World Income Scenarios

    Let's calculate income for different account sizes selling puts monthly at ~5% OTM:

    | Account Size | Stock | Strike | Premium | Monthly Income | Annual Income | Annual % | $5,000SOFI $14$13$0.45 ($45)$45$54010.8% $15,000AMD $165$157$3.20 ($320)$320$3,84025.6% $25,000AAPL $195$185$2.75 ($275)$275$3,30013.2% $50,000SPY $530$520$4.20 ($420)$420$5,04010.1% | $100,000 | Diversified | Mixed | Mixed | $900 | $10,800 | 10.8% |

    Why Annualized Returns Are Misleading

    That 60% annualized figure from our first example looks amazing. But it assumes:

  • You repeat the trade successfully every month
  • You never get assigned
  • Premiums stay the same
  • No losing months

    • Reality is different. Assignment happens, premiums fluctuate with volatility, and some months you'll close at a loss. A more honest estimate: take the annualized number and cut it by 40-50%. That 60% becomes 30-36% in practice, which is still excellent.

    Adjusting for Assignment Probability

    A complete income estimate accounts for assignment scenarios:

    Expected monthly return formula:

  • Expected Return = (Prob. of Profit × Premium) − (Prob. of Assignment × Expected Loss if Assigned)

    • Example with AAPL $185 put:

  • Premium: $275
  • Probability of profit: 75%
  • Average loss if assigned (estimated): $500
  • Expected return: (0.75 × $275) − (0.25 × $500) = $206.25 − $125 = $81.25 expected per month
  • Annualized expected: $975 on $18,500 = 5.3%

    • This is a more conservative but realistic picture. Still solid for a low-maintenance income strategy.

    Building Your Personal Calculator

    Track these numbers for each trade:

  • Date opened / Date closed
  • Premium collected
  • Capital committed (strike × 100)
  • Days held
  • Outcome: expired worthless, closed early, or assigned
  • Actual return

    • After 10-20 trades, you'll have your personal win rate and average return. These real numbers are worth more than any theoretical calculator.

    Quick Reference: Premium Yields by Volatility

    | Implied Volatility | Typical 30-day, 5% OTM Premium (% of strike) | Low (15-20 IV)0.3-0.8% Medium (25-35 IV)0.8-2.0% High (40-60 IV)2.0-4.5% | Very High (60+ IV) | 4.0-8.0%+ |

    Higher IV means higher premiums, but also higher risk. A stock with 60 IV is volatile for a reason. OptionsPilot displays the annualized premium yield for every strike, so you don't need to calculate manually — just sort by yield and filter for your risk tolerance.