Put Option shown as negative value

Since you're short the put, you'd have to buy it back in order to close your position before it expires. If the put currently sells for $21, then you would have to pay $21 to close your position. So in a manner of speaking you "owe" this amount. Since you received $41 in premium and you can close out your position by paying $21, you have a paper "return" of $20.

It's the opposite effect of buying an option, where your "return" is what you can sell it for minus what you paid for it. So if you had bought the option for $41 and it currently sells for $21, the "value" of that option is $21 and you'd have a return of -$20. Since you're short, the "value" is negative (you'd have to pay $21 to close the position).

If you hold this position to expiry and it closes out-of-the-money, you will "owe" nothing and your profit will just be your premium. If it is in the money you will have to either buy the put back to close your position, or let it settle, buying the stock at the strike price with your cash margin. Since you bought it for more than the current market price, you'd have an instant "paper" loss.

how is my return anything less than $41 if share price is above strike?

Remember that "return" is what you received in premium minus what you will owe if the option is exercised (or what it costs you to buy it back). Your return at the time of opening the position was 0 (ignoring any bid/ask spread) since you could just buy the position back for what you received for it. If the price of the stock has gone up since you sold it, then the put (all else being equal) would be worth less, so you can buy it back for less than you paid for it. Your "return" will never be more than $41, because the lowest possible value for the put is $0, and your only profit will be the $41 you received in premium.

If you sold a $4.00 put for 41 cents, that means that if you are assigned, you will buy the stock for a net cost of $3.59

Due to time decay and/or share price rise, your put is now worth 21 cents. That means that you are ahead 20 cents ($20 gain) and since this is a short put, the cost to buy it back is 21 cents so it is displayed as a current market value of -$21.

What you care about depends on what you are attempting to achieve. If your goal is to acquire the stock for $3.59 then you don't need to do anything. One of two things will happen:

• XYZ is below $4 at expiration and you will accomplish the $3.59 purchase

• XYX is above $4 at expiration and you will earn $41 with no stock acquisition

If your goal was some income rather than ownership of the stock then you could buy to close the put before expiration. Today, that income would be $20.

A short put is equivalent to a covered call. Both have an asymmetric risk/reward in that you bear all of the downside potential while receiving only small premium. If you want to own the stock at a lower price, no problem. If you are chasing income, consider lower risk strategies.