Covered Put Return Calculator
Estimate the maximum profit, break-even and return of a covered put write — short stock plus a short put.
How it works
Max profit = (short entry − strike + premium) × 100 × contracts · Break-even = short entry + premium
A covered put pairs a short stock position with a short put at or below the current price. The premium cushions the short and defines a capped, best-case profit that is realised when the stock falls to the strike and the put is assigned, closing the short at the strike. The trade still carries the short seller’s open-ended upside risk: above the break-even (entry plus premium collected) losses grow with every dollar the stock rises.
Worked example
Short at $100 and sell the $95 put for $4. Max profit per share = (100 − 95) + 4 = $9, or $900 per contract, achieved at or below $95. Break-even on the upside = 100 + 4 = $104.
Frequently asked questions
How is a covered put different from a covered call?
A covered call is long stock plus a short call and profits in flat-to-up markets. A covered put is short stock plus a short put and profits in flat-to-down markets. Both cap the upside in exchange for the premium.
What is the biggest risk?
The short stock leg. If the underlying rallies sharply, the loss on the short can far exceed the premium collected, and there is no upper bound. The put premium only offsets the first few dollars of an adverse move.
When do I reach maximum profit?
When the stock closes at or below the strike at expiry. The put is assigned, you buy shares at the strike to cover the short, and you keep the full premium plus the gain from your higher short entry.
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Educational estimate, not investment advice. Options and leveraged positions carry substantial risk.