When trading naked, many traders first read the prospectus and disclosures when they are sitting at a table facing an attorney representing their broker. And many never recover. The OP should be very thankful he isn't one of them.
"Options are riskier than stocks" <--- biggest misconception ever. Options in and of themselves are not more risky than stocks. Don't believe me? Take a guess what had similar returns but significantly lower portfolio volatility over the past 10 years, long SPY or short naked ATM puts. If you guessed stocks, you would be wrong. The derivative product isn't the risk, the over-leveraging by the uninformed newbie is the risk.
Can you post what comms you paid for selling then buying? There are times when it is advantageous to do these penny option trades but my broker charges too much comms for anything quoted in pennies < $0.10 to make the trade worthwhile
A moronic comment by someone who is clueless. A good broker LIKE IB will liquidate you before expiration as you don't have the ability to pay when assigned upon expiration.
Just had this exact conversation today, almost word for word. Oddly, the guy has been running endless analyses, backtests, projections, etc. on how well selling puts works - and still parroted the silly "options are riskier than stocks" story.
"options are riskier than stocks" - Too vague. Which ones? How many? Under what scenario? The biggest losses I have seen involved linear products. (Surprisingly on spreads) The biggest "WTF just happened" losses - options.
Your put option expiry date is a few days after ex-dividend date. Your strike is close to the money. high probability you'll be assigned. Here's a positive spin. You bought the underlying at discount. This type of position is placed before ex-dividend date.