ERII Cash-Secured Put Strategy

ERII (Energy Recovery, Inc.), in the Industrials sector, (Industrial - Pollution & Treatment Controls industry), listed on NASDAQ.

Energy Recovery, Inc., together with its subsidiaries, designs, manufactures, and sells various solutions for the seawater reverse osmosis desalination and industrial wastewater treatment industries worldwide. The company operates through Water and Emerging Technologies segments. It offers a suite of products, including energy recovery devices, and high-pressure feed and recirculation pumps; hydraulic turbochargers and boosters; and spare parts, as well as repair, field, and commissioning services. The company also offers a solution to reduce energy consumption in natural gas processing and in refrigeration systems that use carbon dioxide. It provides its products under the ERI, Ultra PX, PX, Pressure Exchanger, PX Pressure Exchanger, PX PowerTrain, VorTeq, IsoBoost, AT, and AquaBold names to large engineering, procurement, and construction firms; end-users and industry consultants; original equipment manufacturers; and aftermarket customers. The company was incorporated in 1992 and is headquartered in San Leandro, California.

ERII (Energy Recovery, Inc.) trades in the Industrials sector, specifically Industrial - Pollution & Treatment Controls, with a market capitalization of approximately $428.3M, a trailing P/E of 21.25, a beta of 1.04 versus the broader market, a 52-week range of 8.135-18.32, average daily share volume of 972K, a public-listing history dating back to 2008, approximately 254 full-time employees. These structural characteristics shape how ERII stock options price implied volatility around earnings windows, capital events, and macro-driven sector rotations.

A beta of 1.04 places ERII roughly in line with broader market moves, so the strategy payoff and realized volatility track the index-equivalent baseline.

What is a cash-secured put on ERII?

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 ERII snapshot

As of May 15, 2026, spot at $8.39, ATM IV 42.20%, IV rank 18.28%, expected move 12.10%. The cash-secured put on ERII 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 ERII specifically: ERII IV at 42.20% is on the cheap side of its 1-year range, which means a premium-selling ERII cash-secured put collects less credit per unit of strike-width risk, with a market-implied 1-standard-deviation move of approximately 12.10% (roughly $1.02 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 ERII expiries trade a higher absolute premium for lower per-day decay. Position sizing on ERII should anchor to the underlying notional of $8.39 per share and to the trader's directional view on ERII stock.

ERII cash-secured put setup

The ERII 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 ERII near $8.39, the first option leg uses a $7.97 strike; additional legs (when the strategy has them) anchor to spot-relative offsets. Premiums come from the bid/ask midpoint on the listed ERII 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 ERII shares for the stock leg in covered calls and collars).

ActionTypeStrike / BasisPremium (est)
Sell 1Put$7.97N/A

ERII cash-secured put risk and reward

Net Premium / Debit
N/A
Max Profit (per contract)
Unbounded
Max Loss (per contract)
Unbounded
Breakeven(s)
None on modeled curve
Risk / Reward Ratio
N/A

Max profit equals premium times 100; max loss equals strike minus premium times 100 (at zero, assuming assignment). Breakeven is strike minus premium.

ERII cash-secured put payoff curve

Modeled P&L at expiration across a range of underlying prices for the cash-secured put on ERII. 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.

When traders use cash-secured put on ERII

Cash-secured puts on ERII earn premium while a trader waits to acquire ERII stock at a target strike below the current quote; most attractive when IV is rich and the trader is comfortable owning ERII.

ERII thesis for this cash-secured put

The market-implied 1-standard-deviation range for ERII extends from approximately $7.37 on the downside to $9.41 on the upside. A ERII cash-secured put lets a trader earn premium while waiting to acquire ERII 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 ERII IV rank near 18.28% sits in the lower third of its 1-year distribution, where IV often re-expands toward the mean; this favors premium-buying structures and disadvantages premium-selling structures on ERII at 42.20%. As a Industrials name, ERII options can move on sector-level news flow (peer earnings, regulatory updates, industry-specific macro data) in addition to ERII-specific events.

ERII 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. ERII positions also carry Industrials sector concentration risk; news flow inside the sector (peer earnings, regulatory shifts, supply-chain headlines) can move ERII alongside the broader basket even when ERII-specific fundamentals are unchanged. Short-premium structures like a cash-secured put on ERII carry tail risk when realized volatility exceeds the implied move; review historical ERII earnings reactions and macro stress periods before sizing. Always rebuild the position from current ERII chain quotes before placing a trade.

Frequently asked questions

What is a cash-secured put on ERII?
A cash-secured put on ERII is the cash-secured put strategy applied to ERII (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 ERII stock trading near $8.39, the strikes shown on this page are snapped to the nearest listed ERII chain strike and the premiums come straight from the end-of-day bid/ask midpoint.
How are ERII 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 ERII cash-secured put priced from the end-of-day chain at a 30-day expiry (ATM IV 42.20%), the computed maximum profit is unbounded per contract and the computed maximum loss is unbounded per contract. Live intraday quotes will differ as the chain moves through the trading session.
What is the breakeven for a ERII cash-secured put?
The breakeven for the ERII cash-secured put priced on this page is no defined breakeven on the modeled curve 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 ERII market-implied 1-standard-deviation expected move is approximately 12.10%; 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 ERII?
Cash-secured puts on ERII earn premium while a trader waits to acquire ERII stock at a target strike below the current quote; most attractive when IV is rich and the trader is comfortable owning ERII.
How does current ERII implied volatility affect this cash-secured put?
ERII ATM IV is at 42.20% with IV rank near 18.28%, which is on the low end of its 1-year range. Premium-buying structures (long call, long put, debit spreads) are relatively cheap in this regime; premium-selling structures collect less credit per unit risk.

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