You want to buy TCS. Not at today's ₹3,880 — you'd happily pay ₹3,800. Instead of placing a limit order and waiting for free, you could get paid thousands of rupees every month just to have the patience. This is the Cash-Secured Put (CSP), and it's the smartest way to accumulate large-cap Indian stocks at your price.
This guide shows how to build a TCS CSP live, explains the Delta math, walks through what happens when assigned, and introduces the Wheel strategy that converts idle cash into ongoing income.
What You Will Learn
1. The Cash-Secured Put — How It Works
The trade
Sell 1 put option at strike K. Keep cash equal to K × lot_size in your account. Collect premium upfront. At expiry:
- If stock > K: put expires worthless. Keep premium. Sell another put next month.
- If stock < K: assigned. Buy shares at K. Effective cost = K - premium.
2. Live TCS Setup — spot ₹3,880
TCS · spot ₹3,880 · 35 DTE · IV 24%
SELL 3,800 PE at ₹35
Strike₹3,800 (2% below spot)
Delta-0.28 (short → +0.28 effective)
Premium per share₹35
Lot size175 shares
Premium collected35 × 175 = +₹6,125
Cash to set aside3,800 × 175 = ₹6,65,000
Yield this cycle6,125 / 6,65,000 = 0.92%
Annualized if repeated monthly~11% (plus interest if cash earns T-bill yield)
3. Delta Selection — The Probability Trade-off
Delta vs Premium vs Assignment RateMonthly CSP
| Delta | Strike (TCS 3,880) | Premium | Annual Yield | Assignment rate |
|---|---|---|---|---|
| 0.15 | ₹3,700 | ₹18 | ~6% | ~15% (1-2x/yr) |
| 0.20 | ₹3,750 | ₹26 | ~8% | ~20% (2-3x/yr) |
| 0.28 (sweet spot) | ₹3,800 | ₹35 | ~11% | ~28% (3-4x/yr) |
| 0.35 | ₹3,840 | ₹48 | ~15% | ~35% (4-5x/yr) |
| 0.50 (ATM) | ₹3,880 | ₹68 | ~21% | ~50% |
4. What Happens If You're Assigned
Scenario · TCS drops to ₹3,750 by expiry
You get assigned — you now own 175 TCS shares
Buy 175 shares at strike175 × ₹3,800 = ₹6,65,000 paid
Premium kept from put+₹6,125
Net cash outflow₹6,58,875
Effective cost per share₹3,765
TCS market price right now₹3,750 (paper loss ₹15/share)
Unrealized P&L175 × (3,750 - 3,765) = -₹2,625
You're down ₹2,625 on paper — but you bought a stock you wanted at a 3.3% discount to the price when you started. Your limit order at 3,800 would have done the same thing, but without the ₹6,125 buffer. Now sell a covered call on these 175 shares (the Wheel continues).
5. The Wheel Strategy
The Wheel — 12-Month Cycle on TCS₹6.65L capital
| Month | Action | Premium | Position End |
|---|---|---|---|
| 1 | Sell 3,800 PE | +₹6,125 | Cash, no shares |
| 2 | Sell 3,800 PE (not assigned) | +₹5,800 | Cash, no shares |
| 3 | Assigned! Buy 175 shares at ₹3,800 | +₹6,300 | 175 TCS shares |
| 4 | Sell 3,880 CE (covered call) | +₹5,600 | Still holding 175 shares |
| 5 | Sell 3,900 CE | +₹6,100 | 175 TCS shares |
| 6 | Called away at ₹3,900 + capital gain ₹17,500 | +₹5,400 | Cash, shares sold |
| 7-12 | Repeat CSP cycle | +₹36,000 | Varies |
| 12-month total | +₹88,825 premium + ₹17,500 cap gain = ₹1,06,325 | Yield ~16% on ₹6.65L | |
6. CSP vs Limit Order — The Honest Comparison
Same goal, different outcomesBuy TCS at ₹3,800
| Scenario | Limit Order | Cash-Secured Put |
|---|---|---|
| TCS stays above ₹3,800 for 1 year | ₹0 earned | ~₹70k premium |
| TCS drops to ₹3,800 once | Buy at ₹3,800 | Buy at ₹3,765 effective |
| TCS drops to ₹3,500 | Buy at ₹3,800, lose ₹300 | Buy at ₹3,765, lose ₹265 |
| TCS rallies to ₹4,500 | Miss the rally | Miss the rally + ₹70k premium |
Build CSP ladders in Strategy Lab
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Open Strategy Lab →Frequently Asked Questions
What is a Cash-Secured Put?
A Cash-Secured Put (CSP) is when you sell a put option and keep enough cash in your account to buy the shares if assigned. You collect premium upfront. If the stock stays above the strike, the put expires worthless and you keep the premium. If the stock drops below the strike, you're obligated to buy shares at the strike price — but you've already collected premium, so your effective cost is strike minus premium.
How is it different from a limit order?
With a limit buy at ₹3,800, you wait for free. With a cash-secured put at 3,800 strike, you get paid (say ₹35 premium) while you wait. If TCS drops to ₹3,800, both result in buying shares — but the put strategy nets you the premium, reducing your effective cost to ₹3,765. If TCS stays above ₹3,800, the limit order does nothing; the put gives you ₹6,125 profit. Put wins in every scenario.
What's the capital requirement?
You must hold cash equal to (strike × lot size) to be 'covered.' For TCS 3,800 PE with 175 lot, that's 3,800 × 175 = ₹6,65,000 per lot. Indian brokers hold this as margin. This is a disciplined use of idle cash — it earns option premium instead of sitting in savings at 3-4%.
What if I get assigned?
Assignment means you buy 175 shares of TCS at ₹3,800. You paid ₹6,65,000 in cash. You keep the ₹6,125 premium collected. Effective cost: ₹6,58,875 for 175 shares = ₹3,765 per share. From there, you can: (1) hold shares long-term, (2) sell covered calls on them (the Wheel strategy), or (3) exit if your thesis changes.
What Delta should I sell?
For cash-secured puts, 0.20-0.30 Delta is the standard range. A 0.25 Delta put has ~25% probability of being assigned. Premium yields are typically 1-2% per month on the capital reserved. Going more OTM (0.15 Delta) means smaller premiums but less assignment risk; more ATM (0.35+) means higher income but frequent assignment. Most Indian retail investors start at 0.25.
What is the Wheel strategy?
The Wheel is an automated income cycle: (1) Sell cash-secured puts on a stock you want to own. (2) If assigned, take delivery of shares. (3) Sell covered calls on those shares. (4) If assigned on the call, shares are sold and you're back to cash. Repeat. Each cycle generates 2-3% premium income. Well-suited to stable Indian large-caps: TCS, INFY, HDFCBANK, RELIND, ICICIBANK.
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