I wrote my response between the time you wrote that you had options trading experience so I might of written a slightly different answer. I don't know your prop firms trading style so I'm making an assumption here so bear with me but I would guess that if they thought you wanted to own the stock they would of suggested you going long at yesterday market prices for the stock versus having the stock put to you at the higher strike price less the nake put credit. There are longtime traders that do the trade you did but only under certain cirmustances. Many prop firms don't want traders holding overnight. Trading the option intraday might not of raised a flag but going in to the close holding the position especially if your trading options that expire tomorrow(again an assumption) then they would/should know that your going to get assign. Affectively if you had bought the put then you would be the one putting stock to someone else which is what I think you were originally thinking was the case. (another assumption on my part) I wish you the very best. Personally options have treated me well over the years. Bsulli
I don't day trade and the firm knows I hold all my positions for weeks if not months. The option actually expires in May, not April. I'm hoping the stock will be rising sharply in the next month due to a much hyped product release (by now you should know what stock this is) and selling these options with my risk-based margin will net me the best risk/reward. Only 40% of the options were assigned.
A lot of companies hype products. If you don't mind holding the assigned stock you can write a covered call on it for a credit to your account. If you write it for the strike price that it was put to you at you will make less now but still possibly make money from both credits if the stock gets called away. There is more but I have to leave now so the reason for not expanding further. I would suggest additional reading on selling. Selling/going naked if you call the trend direction correctly and put time decay on your side as well but if your on the wrong side the risk can be extremely high. I been trading options for around 20 years now and made similar mistakes to your's earlier in my learning curve. We all make them at some point. Good luck and good trading. Bsulli
I don't know what they call it. What's the difference between the two? They give me risk-based margin.
maae, you can't sell puts that deep ITM, when you sell puts w/ absolutely zero time value, there's a very high chance of assignment. AND THE MOST IMPORTANT THING IS: When you SELL options, you're SELLING TIME VALUE, if the option has NO time value, why are you selling it? You're giving away an option for free. In your case, you might as well just buy the stock, rather then sell the put.
I see. There was some time value as the stock still has a month left but I guess there wasn't enough time value. Your point is well taken. In this instance however I got better margin by selling puts as opposed to buying the stock.
Stock at 90, strike 115, selling for 25. There's absolutely no time value in this option, my friend. Your comments make me doubt you have been trading options for years, but who am I to judge you...