Cash-secured puts represent one of the most conservative option selling strategies for generating consistent income. When you sell a cash-secured put, you collect immediate premium while committing to purchase shares at a predetermined price if the option gets assigned. This strategy works particularly well for traders who want to accumulate quality stocks at discounted prices while generating income in the process.
The key to success with cash-secured puts isn't just selling the options—it's meticulously tracking every transaction to understand your true cost basis and position status. Many traders sell puts and collect premium, but without proper tracking systems, they lose visibility into their actual investment costs, potential obligations, and overall position profitability.
This article demonstrates the complete workflow for selling cash-secured puts on Marvell Technology (MRVL), recording those transactions in a cost basis tracking platform, and maintaining accurate position records. The process takes just minutes but creates a permanent audit trail of every income event and ensures you always know exactly where you stand.
Let's examine a specific cash-secured put transaction on Marvell Technology to understand the mechanics and income generation potential.
On January 16th, 2023, a cash-secured put was sold with the following parameters:
| Parameter | Value |
|---|---|
| Underlying Stock | MRVL (Marvell Technology) |
| Action | Sell to Open |
| Option Type | Put |
| Contracts | 1 |
| Strike Price | $40.50 |
| Expiration Date | January 20, 2023 |
| Premium Received | $86.00 |
| Days to Expiration | 4 days |
| Required Collateral | $4,050.00 |
This single transaction generated $86 in immediate income for just 4 days of market exposure. Let's break down what this means:
The 2.12% return in four days demonstrates the income potential of short-duration cash-secured puts. While you cannot realistically maintain a 193% annualized rate (market conditions vary, strikes adjust, and assignments interrupt the cycle), the example shows how meaningful income can accumulate through consistent execution.
When expiration arrives on January 20th, one of two outcomes will occur:
If MRVL stock price closes above the $40.50 strike at expiration, the put expires worthless. You keep the full $86 premium as pure profit and your buying power is released. You can immediately sell another cash-secured put to generate next week's income.
Result: $86 profit, no shares purchased, collateral freed to deploy again
If MRVL closes below $40.50, you will be assigned and required to purchase 100 shares at $40.50 per share. Your broker will automatically execute this purchase using your secured cash collateral.
Result: You own 100 shares at $40.50 cost basis, reduced by the $86 premium already collected for an effective cost of $39.64 per share. You can now sell covered calls on these shares to generate additional income.
Both outcomes are acceptable when you select strikes carefully. Either you collect premium without purchasing shares, or you acquire shares at a price you deemed acceptable with a built-in discount from the premium collected.
Collecting premium is only half the equation. Proper transaction recording ensures you maintain accurate cost basis tracking and position visibility throughout the trade lifecycle.
After logging into MyATMM, navigate to the Cost Basis page from the dashboard. This page displays all your tracked positions and allows detailed transaction management for each ticker symbol.
Select MRVL from your stock symbol list. If this is your first MRVL transaction, you'll need to add MRVL as a new ticker to your tracking portfolio.
Click the "Create New Default Position" button to open the transaction entry form. This initiates a draft position that you'll populate with the specific transaction details.
The transaction entry workflow uses a two-step process: first create a draft position with proposed transaction details, then commit that draft to your permanent transaction history once verified. This prevents accidental entries and allows you to review everything before finalizing.
Populate the form fields with the exact transaction parameters from your brokerage confirmation:
Pay careful attention to the date field. The system allows backdating entries, which is essential when you're catching up on transaction recording. In this example, the transaction occurred on January 16th but was being recorded several days later. Setting the correct trade date ensures your transaction history maintains chronological accuracy.
Click Save to create the draft position. The system validates your entries and adds the transaction to a proposed transaction section. You'll notice the entry doesn't immediately appear in your main transaction history—it's queued as a proposed addition pending final commit.
The draft position system provides several benefits:
With the draft position created, the platform displays how this transaction affects your overall MRVL position:
This preview functionality helps you catch entry errors before they're permanently recorded. For example, if you accidentally entered 10 contracts instead of 1, you would immediately see a $40,500 collateral requirement that would alert you to the mistake.
Once you've verified all details are correct, commit the transaction to your permanent history. You can do this two ways:
The helper button method is faster and reduces transcription errors. However, you still need to manually verify the transaction date, as the system defaults to the current date rather than the original trade date.
In this example, the helper button moved the transaction down but the date needed manual correction from the current date back to January 16th. This is a known system behavior that will be addressed in future updates.
After correcting the date to January 16th, click Save to finalize the transaction. The system moves the entry from proposed status to your permanent transaction history and updates all position metrics.
The transaction now appears in your committed history showing:
Individual transactions accumulate into meaningful income when executed consistently over time. The dashboard metrics show how this single $86 premium collection fits into your broader trading activity.
After recording the MRVL cash-secured put, the dashboard reflects updated totals:
| Metric | Value | Explanation |
|---|---|---|
| January Premium Collected | $407 | Total premium from all tickers in January |
| MRVL Premium (January) | $407 | All MRVL transactions for the month |
| Latest MRVL Transaction | $86 | The cash-secured put just recorded |
In this paper trading account, MRVL was the only ticker being actively traded in January, which is why the monthly total matches the MRVL-specific total. This simplicity makes the math easier to verify and helps confirm that all transactions have been properly recorded.
The $407 total for January represents multiple transactions building on each other. This demonstrates the compounding effect of consistent option selling:
The $86 from this specific put represents about 21% of the month's total premium. Over a full year of consistent execution, weekly premium collection compounds into substantial income that many traders use to supplement their primary investment returns.
This example used a single contract (100-share obligation) requiring $4,050 in collateral. Position sizing should be based on your overall account size and risk tolerance:
Conservative position sizing ensures you can handle assignments without depleting your capital or creating concentration risk in a single position. The goal is consistent income generation, not maximum leverage.
The cash-secured put demonstrated here represents the first step in the wheel strategy—a complete systematic approach to generating income from both puts and calls on the same underlying stock.
The wheel strategy creates continuous income through three repeating phases:
Sell puts at strikes where you're comfortable owning shares. Collect premium while waiting for assignment. If puts expire worthless, keep the premium and sell new puts. If assigned, move to Phase 2.
When assigned, you purchase shares at the strike price. Your effective cost basis is reduced by all premium collected on the put. You now own shares that can generate covered call income.
Sell calls against your shares at strikes above your cost basis. Collect premium while the shares remain in your portfolio. If calls expire worthless, keep shares and premium, then sell new calls. If assigned, shares are sold at the strike price and you return to Phase 1.
The MRVL cash-secured put at $40.50 represents Phase 1. If assigned, the trader would own 100 shares at an effective $39.64 cost (after the $86 premium). Those shares would then support covered call sales—perhaps a $42 strike call collecting another $75 in premium. If that call gets assigned, shares sell at $42, locking in a $2.36 gain plus $161 in total premium ($86 put + $75 call), then the cycle starts over with a new cash-secured put.
The wheel strategy involves numerous transactions across multiple phases. Without systematic tracking, you quickly lose visibility into:
MyATMM solves this by tracking every transaction chronologically and calculating premium-adjusted cost basis automatically. When you're on Phase 3 after cycling through the wheel multiple times, you need accurate data to know whether your current covered call strike makes sense relative to your true breakeven point.
Theory and mechanics matter, but successful implementation requires attention to practical execution details that separate consistent income generators from frustrated traders.
Choose strikes based on your genuine willingness to own shares at that price:
The $40.50 strike in the MRVL example was selected based on technical support levels and the trader's analysis that MRVL represented good value at that price. Don't just chase premium—select strikes where assignment would be acceptable or even desirable.
Short-duration puts (7-14 days) offer several advantages for active traders:
The 4-day expiration in this example demonstrates ultra-short duration execution. While the absolute premium was only $86, the annualized return rate exceeded 190% because capital was only tied up for four days.
Use limit orders at the mid-point between bid and ask prices rather than market orders:
Market orders on options can result in poor fills due to wide bid-ask spreads. The few extra dollars captured through patient limit order execution compound significantly over dozens or hundreds of transactions annually.
When assignment occurs, immediately record the share purchase in your tracking system:
Assignment is not failure—it's a planned outcome that advances you to the next phase of the wheel strategy. Proper tracking ensures you handle assignments systematically rather than scrambling to figure out your position status.
Understanding what not to do is as important as knowing proper execution techniques. These common mistakes derail otherwise sound strategies.
The biggest mistake is chasing premium on stocks you would never actually want in your portfolio. When those puts inevitably get assigned, you're stuck holding shares of companies you don't believe in, creating forced long-term losses or panic selling.
Only sell puts on stocks that meet your fundamental criteria for ownership. The MRVL example works because the trader had already researched the company and determined it represented a quality semiconductor investment at reasonable valuations.
Selling more puts than your cash reserves can support creates margin risk. If you sell 10 contracts at a $40 strike, you need $40,000 in available buying power. Selling on insufficient capital leads to:
Always maintain cash reserves to handle full assignment on every put you sell simultaneously. This conservative approach prevents disasters.
Many traders sell puts, collect premium, and never formally record the transactions. Months later, they have no idea what their true cost basis is, how much total premium they've collected, or whether their strategy is actually profitable after commissions and fees.
The few minutes spent recording each transaction as demonstrated in this article creates accountability and visibility that dramatically improves long-term results. Your tracking system becomes your business intelligence dashboard for option income generation.
Some traders panic when puts go in-the-money and roll them repeatedly to avoid assignment, often accepting worse terms (lower strikes, smaller credits, longer durations) just to dodge share ownership. This destroys the strategy's effectiveness.
If you selected your strike properly, assignment should be acceptable. Let it happen, own the shares, and start selling covered calls. The wheel strategy is designed to handle assignment—fighting it usually results in worse outcomes than accepting it.
An $86 premium looks attractive until you subtract a $5 commission and $0.65 per-contract fee, leaving $80.35 net. On high-frequency short-duration strategies, commissions can consume 10-15% of gross premium if you're not careful.
This example explicitly showed the decision to track raw numbers in a demo account without commission adjustments, but in live trading, always factor real costs into profitability calculations. Choose brokers with competitive option commission rates for serious option selling activity.
Cash-secured puts transform market participation from speculation into systematic income generation. Rather than trying to predict whether MRVL will rise or fall, the strategy creates profitable outcomes either way: premium collection if the put expires worthless, or share accumulation at discounted prices if assignment occurs.
The $86 premium from the MRVL example represents one transaction in what becomes a continuous income stream through consistent execution. Week after week, you sell puts, collect premium, manage assignments, and record transactions. This systematic approach removes emotion and creates predictable cashflow regardless of market direction.
Transaction recording separates successful option income traders from those who eventually lose track of their positions and abandon the strategy. The MyATMM platform demonstrated in this article provides the infrastructure needed to maintain accurate records, calculate true cost basis, and understand position status at any moment.
The wheel strategy connection elevates cash-secured puts from isolated trades into a complete income system. Phase 1 (puts) leads naturally to Phase 2 (assignment) which enables Phase 3 (covered calls), creating a self-perpetuating cycle of premium collection that works in any market environment.
Start with proper position sizing—one or two contracts representing 5-10% of your portfolio. Select strikes on quality stocks where ownership aligns with your investment thesis. Use short durations to maximize premium collection frequency. Record every transaction completely and immediately. Accept assignment as strategic advancement rather than failure.
These principles transform cash-secured puts from risky speculation into conservative income generation that compounds over months and years into substantial returns. The trader tracking $407 in January premium will likely collect over $4,000 annually through nothing more than consistent weekly execution of the same basic strategy demonstrated here.
Income generation through cash-secured puts isn't about hitting home runs or finding perfect trades. It's about executing a systematic process repeatedly, tracking meticulously, and allowing small individual premiums to accumulate into meaningful annual cashflow. The infrastructure and discipline matter more than market timing or stock selection genius.
Options trading involves significant risk and is not suitable for all investors. Selling cash-secured puts obligates you to purchase shares at the strike price if assigned, which can result in losses if the stock price declines significantly below your purchase price. Premium collected provides only limited downside protection.
The examples shown use paper trading accounts and do not reflect real money results. Actual trading involves commissions, fees, slippage, and market conditions that may differ from examples. Past premium collection does not guarantee future income.
This content is for educational purposes only and should not be considered financial advice or a recommendation to trade any specific security or implement any particular strategy. Always conduct your own research and consider consulting a qualified financial advisor before trading options.
MyATMM records every cash-secured put, calculates premium-adjusted cost basis automatically, and shows exactly where you stand on every position. Stop losing track of premiums and assignments.
Track up to 3 tickers completely free. No credit card required.
Start Tracking Your Put Income TodayJoin systematic option sellers who track every transaction