What is a cash-secured put?

Selling a cash-secured put means you agree to potentially buy shares at a set price (called the strike price) if the stock falls. In return, you receive a payment upfront (called the premium). You keep enough cash on hand to buy the shares if that happens.

If the stock stays above the strike price, the option expires worthless and you keep the premium. If it drops below the strike, you may be assigned the shares—but the premium you received lowers your cost.

With ASML's high stock price (around EUR 860 / USD 998*), traditional options can require large investments. But Euronext mini options, which represent just 10 shares per contract, make it easier for long-term investors to get started or add to a position in smaller steps.

A simple example using ASML mini options

Let’s look at a real-world example.

Important note: The strategies and examples described are purely for educational purposes. They assist in shaping your thought process and should not be replicated or implemented without careful consideration. Every investor must conduct their own due diligence, considering their financial situation, risk tolerance, and investment objectives before making decisions. Remember, investing in the stock market carries risks, so make informed decisions.

Suppose you sell 1 ASML mini 800 put expiring 17 October. This trade pays around EUR 13.05 (USD 15.14*) per contract. Since each contract covers 10 shares, you receive EUR 130.50 (USD 151.44*) in total.

You need to set aside EUR 8,000 / USD 9,280* in case you're assigned. If the stock stays above EUR 800 (USD 928*), the option expires worthless and you keep the full premium. That’s a 1.63% return in 8 days, assuming you are not assigned.

If the stock falls below EUR 800 (USD 928*), you may be required to buy 10 ASML shares at that price. But since you already received EUR 13.05 (USD 15.14*) per share, your effective purchase price becomes EUR 786.95 (USD 912.86*).

Why now?

ASML will release Q3 earnings on 15 October. The market is watching closely for updates on:

• High-NA EUV tool rollout
• China-related export restrictions
• Customer investment trends

These events can make the stock more volatile, which increases option premiums. For put sellers, that means potentially more income. But it also means more risk of the stock falling.

Key risks to understand

• Earnings risk: If results disappoint, the stock could drop sharply.
• Headline risk: ASML is sensitive to regulation, especially around exports to China.
• Assignment risk: You must be willing and able to buy 10 shares at the strike price if the stock falls.
• Stock-specific risk: ASML is a high-quality company, but still a single stock in a cyclical industry.

This isn’t a strategy for everyone. But if you’re happy to own ASML for the long term, this may be a sensible way to begin.

Tips for long-term investors

• Stick to strike prices you’d be comfortable buying at. In this example, that’s EUR 787 (USD 913*) per share.
• Keep sizing in check. One mini contract = 10 shares = around EUR 8,000 (USD 9,280*).
• Have a plan in advance. If ASML drops after earnings, will you buy the shares, roll the put forward, or close the trade?

Quick FAQ

Q: What happens if I'm assigned?
You buy 10 ASML shares at the strike price, using the cash you set aside.

Q: Can I exit early?
Yes. You can buy back the put at any time before expiry to close the trade.

Q: Why use mini options instead of standard ones?
Mini options cover 10 shares instead of 100. That makes them more accessible and easier to manage for long-term investors.

Final word

Cash-secured puts are not just for traders. They can be useful for long-term investors looking to earn extra income or gradually build positions in quality companies. With mini options available on ASML, it’s now easier to tailor this strategy to your portfolio size and risk comfort.

This example is for educational purposes only and is not investment advice. Selling puts carries risk of loss if the stock declines significantly. Please ensure you understand the mechanics and risks before trading.