Getting assigned put but with not enough cash to purchase

Discussion in 'Options' started by jbperez, Sep 12, 2011.

  1. jbperez


    ^ I guess you are yet another person who doesn't know the right answer either... rotflmao!!!!

    And here I was thinking that the whole point of having a trader forum was to be able to get help with tricky questions such as these...
    #21     Sep 23, 2011
  2. jbperez


    How have your other bets in the market been turning out lately? Considering your general crabbiness, it doesn't look like your intuition is working that well for you at all. :)

    The truth is that I have searched high and low for the answer to this question, short of asking a brokerage firm directly (because I want a general answer rather than a brokerage-specific one). The OIC booklet doesn't seem to give a specific answer either. I was hoping experienced traders would know but it looks like I have to wait a while before one actually answers.
    #22     Sep 23, 2011
  3. if it is a spread they should exercise the other wing and then short position will be closed out by long.


    * sell 1 contract GLD put @ 174 strike price
    * buy 1 contract GLD put @ 170 strike price

    you get:

    +100 shares @ 174
    -100 shares @ 170

    you lost $400.... so stop pissing in your shoes.
    #23     Sep 23, 2011
  4. jbperez


    I didn't lose anything. Like I said this was a theoretical question.

    Are you saying that if, on expiration Friday, GLD ends at $172, both legs of the spread would still be executed even though the $170 strike is actually OTM?

    Furthermore, why should I lose $400 if I should only be losing $200??
    #24     Sep 23, 2011
  5. These questions are not that tricky but they are getting a bit tedious. If you are dumb enough not to close out your position at expiration your short put will cause you to buy a stock worth 172 for the price of 174. Your long will expire worthless and not be exercised. If you don't have the cash in your account to buy, that would be the same as your original question. You are also at risk that the stock will drop between Friday and Monday.
    #25     Sep 23, 2011
  6. spindr0


    The general answer is that if you have a Reg T margin violation, your broker has the right to close any positions he wants in order to satisfy the deficiency and he has no obligation notify you. Your account will be restricted.

    A general answer is worthless because brokers are allowed to have more restrictive margin requirements than Reg T as well as various degreees of account limitation. The correct answer is brokerage-specific and can only be determined by getting off your lazy ass and picking up a phone.
    #26     Sep 23, 2011

  7. Call your broker. Thats why you pay commissions, so you can call the 1-800 number or send them an email with that question.

    When I have a question regarding a trade, the first thing I did before I entered it was send a message to my broker and get a response back with the answer I am looking for. And you will get it 10x faster and with certainty from the brokrage firm since they have S7 professionals and rules are different from different brokerages. They are the ones who can answer those kinds of queries. not some forum.

    You pay those commissions for services, might as well as avail yourself to the services offered.
    #27     Sep 23, 2011