Dictionary of Finance and Investment Terms: writing cash-secured puts
writing cash-secured puts
option strategy that a trader who wants to sell put options uses to avoid having to use a margin account. Rather than depositing margin with a broker, a put writer can deposit cash equal to the option exercise price. With this strategy, the put option writer is not subject to additional margin requirements in the event of changes in the underlying stock's price. The put writer can also be earning money by investing the premium he or she receives in money market instruments.
