Net cost if assigned
Definition · Level 3 · Spreads & short options
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The strike minus all the premium you have kept on a short put (and on any rolls): your effective price per share if you end up buying.
Example
Sold the 45 put for 1.20, assigned: net cost 45 − 1.20 = 43.80.
Where Tradecraft teaches it
Level 3 · Spreads & short options, in the lesson “Cash-secured puts & the wheel”: Selling a put with the cash set aside to buy the shares, and the wheel that follows it.
Related terms
- Cash-secured putSelling a put while holding enough cash to buy the shares if assigned, typically strike × 100 (some brokers count the premium toward it), so no…
- The wheelAn income cycle: sell cash-secured puts; if assigned, sell covered calls on the shares; if they are called away, start again with puts.
- Back-spread danger zoneWhere a back spread loses the most at expiry: the stock sitting at the long strike.
- BodyThe middle strike of a butterfly, short in a long fly: where a long fly earns the most at expiration.
- Breakeven win rateHow often a trade must win just to net zero, treating each outcome as a full win or a full loss: max loss ÷ (max profit + max loss).
- Broken-Wing ButterflyA butterfly with one wing pushed out: buy one call, sell two, and buy one much further away, so the two wings are different widths.