Recent price action shows the shares stabilising near the 45–50 area, a zone that has acted as short-term support. For investors who remain constructive on Novo but prefer a more deliberate entry point, a cash secured put offers a structured and financially disciplined approach.

This article focuses on the mechanics of the strategy. For a broader look at Novo’s fundamentals, see our colleague’s comparison of Novo Nordisk and Eli Lilly (see the related links section below this article).

What a cash secured put is

A cash secured put is a conservative options strategy designed for investors who are willing to buy shares at a predetermined price. You sell a put option at the strike level where you would be comfortable becoming a shareholder and keep enough cash aside to meet that obligation.

Two outcomes exist:

• If the share price stays above the strike at expiry, the option typically expires worthless and you keep the premium.
• If the price finishes below the strike, you must buy the shares at the strike, using the cash you reserved.

For long-term investors, this functions as a limit order that pays you a premium while you wait.

The Novo example: selling the December 45 put

Important note: The strategies and examples provided in this article are purely for educational purposes. They are intended to assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor or trader must conduct their own due diligence and take into account their unique financial situation, risk tolerance, and investment objectives before making any decisions. Remember, investing in the stock market carries risk, and it's crucial to make informed decisions.

Below is the example setup based on current market conditions.

• Underlying: Novo Nordisk (NVO:xnys)
• Current share price in example: about USD 49
• Option: Sell to open 45-strike put
• Expiry: 19 December 2025
• Premium: about USD 1.40 per share
• Contract size: 100 shares

Key figures for this setup:

• Cash reserved: USD 4,500 per contract
• Premium received: USD 140
• Effective entry price if assigned: 43.60
• Premium yield over the period: roughly 3.1% for about 37 days (for comparison only)

This keeps the strategy simple and transparent. Investors set aside the full strike value and evaluate the trade as if they were placing a buy order at 45.

Why the 45 strike matters

The 45 level aligns with the short-term support visible on the charts. For many long-term investors, this is a more comfortable entry than buying directly at current levels.

There is also notable open interest at the 45 strike, as shown in the option chain. Open interest represents the number of outstanding contracts. High concentrations can behave as friction zones where market participants hedge and adjust positions. While not a predictive signal, it is a reference level many traders monitor.

Three potential outcomes at expiry

Using simple numbers helps clarify what each scenario may look like.

1. Novo stays above 45

If the share price remains above 45 at expiry, the put expires worthless. You keep the USD 140 premium. The return on the reserved USD 4,500 is about 3.1% for the period. You do not buy the shares, so if the market rallies significantly, you forgo that upside. You can repeat the strategy if you still want exposure.

2. Novo finishes slightly below 45

If Novo ends near the strike—for example at 44.50—you are assigned and purchase 100 shares at 45. After accounting for the premium, your effective cost is 43.60. You begin your long-term investment with a small buffer even though the stock declined during the holding period.

3. Novo declines sharply

If the shares fall substantially—for example to 35—you still must buy at 45. Your effective cost remains 43.60, and the loss resembles buying the stock outright at that level. A cash secured put does not shield you from company‑specific downside.

Risks and considerations

A cash secured put is a conservative structure, but it still carries the full downside risk of owning an individual stock. Novo’s long-term prospects are linked to regulatory, competitive and pipeline developments, all of which can influence price behaviour.

Opportunity cost is another factor. If the shares rebound rapidly and never revisit the strike, you may miss the recovery. Position size is important: the obligation to buy 100 shares should fit comfortably within your portfolio.

Investors should also consider tax treatment, currency implications and personal suitability before implementing the strategy.

Practical steps

For investors wishing to implement the strategy:

• Ensure you have sufficient cash to reserve for the obligation.
• Locate Novo Nordisk (NVO:xnys) in the platform and open the options chain.
• Select the 45 put expiring 19 December 2025.
• Place a limit order to sell the option—around the bid or mid-price.
• Monitor the position and be aware of the expiry date and key company developments.

A cash secured put allows long-term investors to pursue ownership at a defined price while generating income on cash held aside. It is a measured way to re-engage with Novo after a volatile period, with clear outcomes and transparent risk.

FAQ

• What happens if I want to exit the position early?

You can close a short put at any time before expiry by buying back the option. The result may be a profit or a loss depending on where the option is trading.

• Is the premium guaranteed?

You receive the premium upfront, but your final profit or loss depends on what happens between trade date and expiry, and whether you are assigned.

• Can I repeat the strategy if I do not get the shares?

Yes. Many long-term investors sell puts repeatedly until they receive assignment at a price they are comfortable with.

• Does this strategy protect me from large declines in Novo?

No. A cash secured put provides only a small buffer equal to the premium received. A sharp fall in the share price can still lead to substantial losses.

• What if the option expires worthless?

You keep the full premium and remain uninvested. You can choose to sell another put or reconsider your entry strategy.