Problem with "Unsettled Cash" in CashAcct

Discussion in 'Options' started by earth_imperator, Jul 22, 2022.

  1. earth_imperator

    earth_imperator

    My "Unsettled Cash" was $0.00, then I short-sold the following 4 puts at strike=1 and premium=0.45, underlying spot was 1.01 :
    Code:
      Filled    Sell to Open    4    MULN Jan 20 2023 1.0 Put    Limit    0.45
    afterwards the Unsettled Cash has become $577.35.
    Why is the Unsettled Cash so much? Shouldn't it rather be
    (strike - credit) * 100 * 4 contracts
    = (1 - 0.45) * 100 * 4 = $220

    or even this:

    credit * 100 * 4 contracts
    = 0.45 * 100 * 4 = $180

    Hmm... I think I'm mixing some wrong things together... Heeelp! :)
     
    Last edited: Jul 22, 2022
    #1     Jul 22, 2022
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  2. BMK

    BMK

    The formula you are describing is not used to calculate the "unsettled cash."

    That formula is the "margin requirement" for cash-secured puts. I put it in quotes because you have a cash account, so technically it's not margin. But the formula you are describing is the amount of money you need to have in your account in order to place the order and maintain the position. You have to have enough cash to buy the stock if the put is assigned, but you get to back out the premium you collected when you sold it.

    I don't know how your broker is calculating the unsettled cash.

    Do you have other postions in the account? LOL
     
    #2     Jul 22, 2022
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  3. earth_imperator

    earth_imperator

    Thx for clarification.
    Yes, I have also some older positions in the account, but they haven't changed in qty,
    Today I did only the above said trade.
    OTOH: now I think in this particular case (short selling) it's even in my favor when it says such a high amount is unsettled, isn't it? :)
     
    Last edited: Jul 22, 2022
    #3     Jul 22, 2022
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  4. vanzandt

    vanzandt

    You got $180 credit. That's unsettled.
    In the meantime they lock up the $400 required to buy the stock on the 1 in a million chance it drops to zero today... minus the .65 commission you payed. Technically the $400 isn't unsettled, but it is locked up so their system just puts it there.

    $400 + $180- $2.60 = $577.40
    The extra nickel is probably some stupid exchange fee.

    Hope that helps.
     
    #4     Jul 22, 2022
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  5. earth_imperator

    earth_imperator

    Thx, very helpful to know what's exactly going on. Here's the transaction entry:
    Code:
    Date/Time               Description                              Amount   Commission  Reg Fee  Details
07/22/2022  15:45:15    Sold 4 MULN Jan 20 2023 1.0 Put @ 0.45   177.35      2.60         0.05
    PS: now (on the next day) it says Unsettled Cash $0.00.
     
    Last edited: Jul 23, 2022
    #5     Jul 23, 2022
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