Getting Paid to Make an Offer: The Cash-Secured Put, Explained

Imagine you walk up to Nestlé and say:

“I like your stock. But not at $85. At $75, I’ll buy it on the spot.”

Nestlé answers: “Deal. And because you’re committing to that, we’ll pay you $1.20 per share — right now. No matter what happens next.”

You just collected $120. Immediately. Without buying a single share.

That is a cash-secured put.

This is the tool I use to pull a steady, second income out of a stock portfolio — a kind of silent paycheck that lands before anything has to go right. This piece walks you through the whole thing: what it is, why it works, what it costs you, and exactly how to place the first order.

One promise up front: no hype. By the end you’ll also know what this system isn’t.

An option is a contract between two parties.

The buyer purchases a right — the right to buy or sell a stock at a fixed price.

The seller takes on the obligation — and gets paid a premium for it.

You and I are the sellers. We collect the premium. We carry the obligation.

That single shift in seat — from buyer to seller — is the whole game. Most people think options are lottery tickets you buy and hope. We’re not buying tickets. We’re the house writing them, and we’re getting paid to do it.

Let’s make it concrete with real numbers. (These figures are illustrative — use them to follow the mechanics, not as today’s quotes.)

Say you like Google (GOOGL). It trades at $385.

You think: “At $365 I’d happily own Google. That’s a 5.2% discount to where it is now.”

So you sell a put on Google:

You sell 1 contract. One contract = 100 shares.

You collect $540 immediately.

Now exactly one of two things happens.

The put expires worthless. You keep the full $540. No shares, no further work.

On the $36,500 in cash you set aside to back the trade, that $540 is about 1.5% in roughly five weeks. Repeat that kind of cycle through the year and you’re in the neighborhood of ~15% annualized on that capital — and you never had to be right about direction, only not catastrophically wrong. (Annualized means “if you could repeat it all year.” You can’t always. But that’s the engine.)

Then you do it again.

You get assigned. You buy 100 Google shares at $365.

But — you already pocketed $540 in premium. So your effective cost is:

$365 − $5.40 = $359.60 per share.

That’s a 6.6% discount to the $385 where Google started.

You now own a company you wanted to own, at a price below where the market was trading when you made the offer.

That isn’t a loss. That’s a discount buy you got paid to wait for.

Three principles do the heavy lifting.

1. You only sell puts on names you’d genuinely buy.

The put forces discipline. You never set a strike on a stock you don’t actually want to own — because assignment means you do own it. This rule quietly removes most bad decisions before you make them.

2. Time works for you.

Every option carries a time value called theta. Each day that passes without the stock falling, the option loses a little value. You’re the seller — so that decay flows to you.

Theta is your silent employee. It works nights, weekends, and holidays, and it never asks for a raise.

3. You get paid up front.

The premium lands on your account the day you place the order. Not if things go well. Not at the end of the term. The moment the order fills.

I trade through Interactive Brokers because:

Other brokers work too. For this system, IBKR is my reference.

“Cash-secured” means you actually hold the cash for a possible assignment on the account. Sell a Google 365 put — backing 100 shares × $365 = $36,500 — and you keep that amount in reserve.

That’s the difference between a cash-secured put and a naked put. We always trade covered. Always.

And one rule I treat as non-negotiable: this is done with private, long-term investable capital only — never business operating capital. Money you might need to run a company, make payroll, or cover next quarter has no place backing options. The whole point is durable, patient capital doing patient work.

Three filters for a good candidate:

Yield without quality is a trap. The premium is the reward; the stock you might end up owning is the real position.

Using the Google trade as the model:

Then, immediately — this part is mandatory:

That second order closes the position automatically once the premium has dropped by half. That’s your take-profit, working while you don’t. You never have to sit at the screen.

This is the single most important habit in the system.

You sold for $5.40. When the option falls to $2.70, you’ve captured 50% of the maximum premium — and you close.

Why exit at half rather than ride it to zero:

Three weeks in, half the premium booked, capital recycled. Done well and repeated, that compounds into a return that’s hard to match with passive holding.

I say this plainly, because it matters.

It is not fast money. The premium per trade is small. The system works through repetition and consistency — not one big win.

It is not risk-free. If a stock falls hard, you’re assigned and sit on a position with a paper loss. Which names, which strikes, how much capital per position — risk management is the whole job, not a footnote.

It is not autopilot. You check, decide, and act every week. It’s a system, not a robot.

What it is: a repeatable, learnable tool for generating structural cashflow out of a stock portfolio — the closest thing I’ve found to building your own pension, one offer at a time.

If you were starting today, here’s what I’d tell you.

One trade. Not ten.

Pick a name you know and respect. Pick a strike 5–8% below the current price. Pick an expiry 35–45 days out.

Sell the put. Set the 50% take-profit order immediately.

Then watch what happens. Learn.

The first trade is the most valuable one you’ll ever place — not for the premium, but for the understanding it builds.

To make this less abstract, here’s the kind of trade I actually place.

I sold a put on Micron Technology (MU) — strike $660, about five weeks to expiry. Premium collected: roughly $3,869 ≈ CHF 3,000.

Micron makes DRAM memory and HBM chips — core infrastructure for AI data centers, exactly the kind of business I’m happy to own.

The strike sat about 18% below the market price. Notice the premium is far fatter than the Google example — that’s implied volatility at work. A higher-IV name like Micron pays much richer premium (here it annualizes well north of 50%), but the wider swings are also the reason it pays so much. More yield, more turbulence. That trade-off is the dial you’re always turning.

Either way, I was paid the day I made the offer.

That’s the machine.

In a separate piece I break down the part most people skip: how I find the candidates. The screening process behind the trades — going from a couple hundred names down to the one or two with premium worth selling.

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This is not investment advice. Cash-secured puts are complex financial instruments and carry a real risk of loss. This article describes my personal practice as a private Swiss investor at Interactive Brokers, using private, long-term investable capital only — never business operating capital. Do your own work, and size your risk to capital you can afford to commit.

Full trade reports every week → alpsincome.substack.com