Cl,opter 19: The Sale of a Put 
TABLE 19-1. 
Results from the sale of an uncovered put. 
XYZ Price at Put Price at 
Expiration Expiration (Parity) 
30 20 
40 10 
46 4 
50 0 
60 0 
70 0 
f IGURE 19-1. 
Uncovered sale of a put. 
$400 
C 
0 
~ ·5. 
X 
w 
'lii 
(/l $0 (/l 
.3 50 
0 
~ a. 
Stock Price at Expiration 
293 
Put Sale 
Profit 
-$1,600 
600 
0 
+ 400 
+ 400 
+ 400 
for a total of $1,400. If the stock were above the striking price, the striking price dif­
forential would be subtracted from the requirement. The minimum requirement is 
I 0% of the put' s striking price, plus the put premium, even if the computation above 
yields a smaller result. 
The uncovered put writing strategy is similar in many ways to the covered call 
writing strategy. Note that the profit graphs have the same shape; this means that the 
two strategies are equivalent. It may be helpful to the reader to describe the aspects 
of naked put writing by comparing them to similar aspects of covered call writing.