Buying power requirement for selling a put in a cash or IRA account

Selling an outright put requires the total cash-secured amount

The buying power requirement for a cash-secured put is the (strike price) × (number of contracts) × (option multiplier). The premium received from the sale of the put can be applied to the initial requirement.

However, if you are selling a put in a margin account, then the buying power requirement is different. To learn more about selling an uncovered/naked put in a margin account, please click here.

Example of selling a cash-secured put

Sell to open 6 Mar 11 puts at $0.75 = $0.75 x 6 qty x 100 = $450 credit received

6 x 11 x 100 = $6,600 cash-secured amount

$6,600 - $450 = $6,150 buying power requirement