Assigned on a cash-secured put? Here's your real cost basis
You sold a cash-secured put, the stock closed below the strike at expiration, and now you own the shares. The question that matters is not “what was the strike?” but “what did I actually pay?”. The answer is lower than the strike, and the difference is the whole point of selling the put.
The formula
You sold the put for a credit. That cash is yours whether or not you get assigned. When you are assigned, you pay the strike for the shares, so the credit effectively discounts the purchase.
Worked example
On June 20 you sell one XYZ $1,490 put expiring July 17 for $30.00, collecting $2,999 after a $1 commission. On July 17 the stock closes at $1,450 and you are assigned 100 shares at $1,490.
| Per share | Total | |
|---|---|---|
| Strike paid | $1,490.00 | $149,000.00 |
| Put premium collected | −$29.99 | −$2,999.00 |
| Cost basis | $1,460.01 | $146,001.00 |
The stock is at $1,450. Against the strike you look $40 a share under water. Against your real cost you are $10 under. That is a different decision about what call to sell next.
This is also what your broker does
Interactive Brokers shows the assigned shares at $1,460.01 in the Average Price column, not $1,490. It nets the put premium into the stock's basis automatically. Robinhood and Schwab do the same in their cost-basis views. So if a spreadsheet says $1,490 and the broker says $1,460, the broker is right.
For tax purposes this one is also true: premium from a put that is assigned reduces the basis of the shares acquired. It is the expired-call premium that is treated differently (as a gain of its own).
Now sell calls against it
The shares are yours at $1,460.01. Every covered call you write from here on comes off that number, not off the strike. Sell a $1,550 call for $40 and let it expire, and you are at $1,420.02. Get called away at $1,550 and the campaign made $1,550 − $1,460.01 + the call premium per share, on shares you were paid to buy.
One subtlety: the put's premium belongs to these shares. If you later sell them and are assigned on a new put, that is a new lot with its own put, and the old premium was profit on the old lot. Keep the two separate or you will double count.
Assigned on more than one put
If you bought 100 shares outright, then were assigned on ten puts for another 1,000, the ten puts' premium still reduces the basis of the combined position. The order the shares arrived in does not matter; what matters is that the shares delivered by an assigned put came with a discount attached. Interactive Brokers handles this the same way, which is a useful check: your computed average cost should match theirs to the cent when your history is complete.