UPST cash-secured puts
A guide to selling cash-secured puts on Upstart Holdings (UPST), with a calculator set up for it. Enter your own numbers: this page does not show live prices.
What happens at expiration
What UPST is
Upstart runs a lending platform that uses AI models to decide who is approved for loans offered by partner banks.
How a cash-secured put works on UPST
You sell one put option on UPST and set aside enough cash to buy 100 shares at the strike price. The buyer pays you a premium today. You keep that premium whatever happens.
If UPST ends below the strike price at expiration, you buy 100 shares at the strike. If it ends above, the put expires worthless and you keep the premium. You are paid to wait while taking on the obligation to buy.
A cash-secured put only fits if you would genuinely want to own 100 shares of UPST at the strike. Rising rates or loan losses can leave you assigned far below the strike.
What to watch with UPST
- Volatility
- UPST depends on interest rates and on investors' appetite for the loans it arranges, so the shares have swung very sharply. Premiums are usually large.
- Events
- Earnings are reported quarterly. Interest rate decisions, loan performance and funding news can also move the shares.
- Dividends
- UPST has not historically paid a dividend, so early exercise driven by a dividend is less of a concern. Confirm the company's current policy before you trade.
- Liquidity
- UPST options are actively traded with many strikes and weekly expirations. Spreads are usually tight but always check the bid and ask on the exact contract you plan to use. Strikes far from the current price can have wider spreads.
Choosing a strike and expiration
A strike close to the share price pays a larger premium but is more likely to leave you buying the shares. A strike farther below pays less but gives the stock more room to fall before you are assigned.
Shorter expirations bring the premium in sooner and let you reset the trade more often. Longer ones pay more in total but keep your cash committed for longer. Use the calculator above to compare the return on capital and breakeven of a few strikes side by side.
Assignment and tax-lot considerations
If your put is assigned, you buy 100 shares of UPST at the strike. The premium you collected lowers your cost per share to the strike minus the premium. If the put expires unused, the premium is generally a taxable gain.
Your broker holds the cash you set aside while the put is open, so you cannot use it for anything else. Tax treatment depends on your situation, so check it with a tax professional before you trade.
This page is for education only and is not financial or tax advice.
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Plain-English terms
- Option contract
- An agreement that covers 100 shares of a stock.
- Strike price
- The price written into the contract. It is the price shares change hands at if the option is exercised.
- Premium
- The money the option seller collects up front. You keep it no matter what happens next.
- Days to expiration (DTE)
- How many calendar days remain before the contract ends.
- Assignment
- When the buyer exercises the option and you must carry out your side of the deal: buy shares. Most exercise happens at expiration, but the buyer can also exercise early.
- Breakeven
- The share price at expiration where the position neither makes nor loses money.
- Annualized return
- A single period's return scaled up to one year. It assumes you could repeat the same trade all year, which is not guaranteed.
- Covered
- You own the 100 shares the call is written against.
- Cash-secured
- You hold enough cash to buy 100 shares at the strike if assigned.