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Spread Put Calculator

Enter the price of the higher put and the price of the lower put. Sell the higher put and buy the lower put. This calculator will provide the profit and yield. Enter the higher put price strike for price paid. Enter the current price.
high put
low put
price paid
price now
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How does selling a covered put work?
Talk to your brokerage. Usually, if you sell a covered put, you agree to buy the stock at the price of the put. You get to keep the money from selling the options after the transaction is completed. If the price of the stock on the day of expiration is below the put price, you will buy those shares at the agreed price. If the stock price on expiration day is above the put price, then you do not have to buy those shares at the put price. You keep the money from selling the options as pure profit. Obviously, the stock can decline beyond the price of the put and you could lose more money because you agreed to buy at a higher price.

What is a spread put?
Since you can lose money if the stock keeps on dropping below your covered put price, it would be wise to have some insurance. If you buy the put at the next lowest price, this put will increase in value as the share price declines. The covered put is similar to selling stocks short. As the price declines, the negative value of the covered put declines.


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About the site and its author: Joseph K. Sunny, Jr., M.D. Most of the pages are created from my reading or clinical experience.

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