• Covered Put   Covered Put

    A covered put, sometimes called a cash-secured put, is a short put position combined with enough segregated cash to pay for the stock if the put is exercised and the trader is forced to buy the stock at the strike price. The risk from the short put is "covered" by the cash.

    A covered put is only slightly less risky than outright ownership of the stock but it's a great way to buy the undelrying stock at a discount if the present stock price isn't palatable.

    See the OptionMath.com Covered Put Cheat Sheet