CMI Cash-Secured Put Strategy
CMI (Cummins Inc.), in the Industrials sector, (Industrial - Machinery industry), listed on NYSE.
Cummins Inc. designs, manufactures, distributes, and services diesel and natural gas engines, electric and hybrid powertrains, and related components worldwide. It operates through five segments: Engine, Distribution, Components, Power Systems, and New Power. The company offers diesel and natural gas-powered engines under the Cummins and other customer brands for the heavy and medium-duty truck, bus, recreational vehicle, light-duty automotive, construction, mining, marine, rail, oil and gas, defense, and agricultural markets; and offers new parts and services, as well as remanufactured parts and engines. It also provides power generation systems, high-horsepower engines, heavy and medium duty engines, application engineering services, custom-designed assemblies, retail and wholesale aftermarket parts, and in-shop and field-based repair services. In addition, the company offers emission solutions; turbochargers; air and fuel filters, fuel water separators, lube and hydraulic filters, coolants, fuel additives, and other filtration systems; and electronic control modules, sensors, and supporting software, as well as new, replacement, and remanufactured fuel systems. Further, it provides automated transmissions; standby and prime power generators, controls, paralleling systems, and transfer switches, as well as A/C generator/alternator products under the Stamford and AVK brands; and electrified power systems with components and subsystems, including battery, fuel cell, and hydrogen production technologies.
CMI (Cummins Inc.) trades in the Industrials sector, specifically Industrial - Machinery, with a market capitalization of approximately $97.91B, a trailing P/E of 36.71, a beta of 1.27 versus the broader market, a 52-week range of 307.9-718.08, average daily share volume of 861K, a public-listing history dating back to 1947, approximately 70K full-time employees. These structural characteristics shape how CMI stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.
A beta of 1.27 places CMI roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline. The trailing P/E of 36.71 is on the rich side, which tends to correlate with higher earnings-window IV expansion as the market debates whether forward growth supports the multiple. CMI pays a dividend, which adjusts put-call parity and shifts the ex-dividend pricing across the listed chain.
What is a cash-secured put on CMI?
A cash-secured put sells an out-of-the-money put while holding cash equal to the strike-times-100 obligation, keeping the premium when the underlying stays above the strike.
Current CMI snapshot
As of May 15, 2026, spot at $696.29, ATM IV 38.10%, IV rank 53.10%, expected move 10.92%. The cash-secured put on CMI below is built from the same end-of-day chain, with strikes snapped to listed contracts and premiums pulled from the bid/ask midpoint at a 34-day expiry.
Why this cash-secured put structure on CMI specifically: CMI IV at 38.10% is mid-range versus its 1-year history, so the credit collected on a CMI cash-secured put sits in line with its long-run distribution, with a market-implied 1-standard-deviation move of approximately 10.92% (roughly $76.06 on the underlying). The 34-day window matched to the front-month expiry keeps theta exposure bounded while still capturing the post-snapshot move; longer-dated CMI expiries trade a higher absolute premium for lower per-day decay. Position sizing on CMI should anchor to the underlying notional of $696.29 per share and to the trader's directional view on CMI stock.
CMI cash-secured put setup
The CMI cash-secured put below is built from the end-of-day chain, with each option leg priced at the bid/ask midpoint of its listed strike. With CMI near $696.29, the first option leg uses a $660.00 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed CMI chain at a 34-day expiry; the cross-strike IV skew is reflected directly in the per-leg values rather than approximated. Quantity sizing assumes one contract per option leg (or 100 CMI shares for the stock leg in covered calls and collars).
| Action | Type | Strike / Basis | Premium (est) |
|---|---|---|---|
| Sell 1 | Put | $660.00 | $16.95 |
CMI cash-secured put risk and reward
- Net Premium / Debit
- +$1,695.00
- Max Profit (per contract)
- $1,695.00
- Max Loss (per contract)
- -$64,304.00
- Breakeven(s)
- $643.05
- Risk / Reward Ratio
- 0.026
Max profit equals premium times 100; max loss equals strike minus premium times 100 (at zero, assuming assignment). Breakeven is strike minus premium.
CMI cash-secured put payoff curve
Modeled P&L at expiration across a range of underlying prices for the cash-secured put on CMI. Each row is one sampled price point from the computed payoff curve; the full curve uses 200 price points internally before being summarized into 10 rows here.
| Underlying Price | % From Spot | P&L at Expiration |
|---|---|---|
| $0.01 | -100.0% | -$64,304.00 |
| $153.96 | -77.9% | -$48,908.75 |
| $307.91 | -55.8% | -$33,513.51 |
| $461.87 | -33.7% | -$18,118.26 |
| $615.82 | -11.6% | -$2,723.02 |
| $769.77 | +10.6% | +$1,695.00 |
| $923.72 | +32.7% | +$1,695.00 |
| $1,077.68 | +54.8% | +$1,695.00 |
| $1,231.63 | +76.9% | +$1,695.00 |
| $1,385.58 | +99.0% | +$1,695.00 |
When traders use cash-secured put on CMI
Cash-secured puts on CMI earn premium while a trader waits to acquire CMI stock at a target strike below the current quote; most attractive when IV is rich and the trader is comfortable owning CMI.
CMI thesis for this cash-secured put
The market-implied 1-standard-deviation range for CMI extends from approximately $620.23 on the downside to $772.35 on the upside. A CMI cash-secured put lets a trader earn premium while waiting to acquire CMI at the strike price; the strategy is most attractive when the trader is comfortable holding the underlying at that level and IV is rich enough to compensate for the assignment risk. Current CMI IV rank near 53.10% is mid-range against its 1-year distribution, so the IV signal is neutral; the cash-secured put thesis on CMI should anchor more to the directional view and the expected-move geometry. As a Industrials name, CMI options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to CMI-specific events.
CMI cash-secured put positions are structurally neutral to slightly bullish; the modeled P&L assumes European-style exercise at expiration and ignores early assignment, transaction costs, dividends paid before expiry on the stock leg (when present), and the bid-ask spread on the listed chain. CMI positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move CMI alongside the broader basket even when CMI-specific fundamentals are unchanged. Short-premium structures like a cash-secured put on CMI carry tail risk when realized volatility exceeds the implied move; review historical CMI earnings reactions and macro stress periods before sizing. Always rebuild the position from current CMI chain quotes before placing a trade.
Frequently asked questions
- What is a cash-secured put on CMI?
- A cash-secured put on CMI is the cash-secured put strategy applied to CMI (stock). The strategy is structurally neutral to slightly bullish: A cash-secured put sells an out-of-the-money put while holding cash equal to the strike-times-100 obligation, keeping the premium when the underlying stays above the strike. With CMI stock trading near $696.29, the strikes shown on this page are snapped to the nearest listed CMI chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
- How are CMI cash-secured put max profit and max loss calculated?
- Max profit equals premium times 100; max loss equals strike minus premium times 100 (at zero, assuming assignment). Breakeven is strike minus premium. For the CMI cash-secured put priced from the end-of-day chain at a 30-day expiry (ATM IV 38.10%), the computed maximum profit is $1,695.00 per contract and the computed maximum loss is -$64,304.00 per contract. Live intraday quotes will differ as the chain moves through the trading session.
- What is the breakeven for a CMI cash-secured put?
- The breakeven for the CMI cash-secured put priced on this page is roughly $643.05 at expiration, derived from end-of-day chain premiums. Breakeven is the underlying price at which the strategy's P&L crosses zero ignoring transaction costs and assignment risk. The current CMI market-implied 1-standard-deviation expected move is approximately 10.92%; if the move sits well outside the breakeven distance, the structure's risk-reward becomes correspondingly tighter.
- When should you consider a cash-secured put on CMI?
- Cash-secured puts on CMI earn premium while a trader waits to acquire CMI stock at a target strike below the current quote; most attractive when IV is rich and the trader is comfortable owning CMI.
- How does current CMI implied volatility affect this cash-secured put?
- CMI ATM IV is at 38.10% with IV rank near 53.10%, which is mid-range against its 1-year history. Strategy selection depends more on directional thesis and expected move than on a strong IV signal.