naked put question

Discussion in 'Options' started by HUPThereIt Is, Jun 21, 2008.

  1. Obviously if you sell a naked put you are obligated to buy a particular security at the strike price on expiration but what happens in the case of bankruptcy?

    Do you have to buy it at the strike at the time of bankruptcy or at the original expiration date?
  2. If it is an American put you buy the security when it is put to you.
  3. timbo


    This is when a penny could cost you.

    Edit: equity is a natural call, so the loss is limited.