What can I do with a naked GOOG put?

Discussion in 'Options' started by Eliot Hosewater, Nov 15, 2006.

  1. I ended up with a naked DEC 470 put after unwinding some other positions today. Of course before that it was pushing 500 and afterwards it tanked to 491-something. I thought 30 points was a comfortable cushion, but this is GOOG after all and it could drop 30 points if Bernanke or someone farts the wrong way.

    Any advice? Just buy to close? Turn it into a spread? Anything else?

  2. what is the net credit of this put for you?? If you are bullish going into the last trading month on GOOG, buy a $460 put to cover. With the run up the last couple days, you might have some decent equity built into that spread, because the $460 put is going to be "cheaper" to purchase now vs. when the premium on the $470 put was sold.

    But if risk management is your biggest concern and you dont like slot machines and in this case already are up, just cover it.
  3. hmm... you can buy it back, buy the underlying, or hedge with a lower strike price. I am assuming that the original trade was not a directional bet, so why end up with one? I wouldn't stay naked too much longer, whatever you do.
  4. If you buy the underlying (u=c-p) then you'd still end up with a naked position, namely a synthetic long call and synthetic short put as well as your original short put. You can hedge with a lower or a higher strike, depending on your view or make a calendar or a fly or whatever you think is reasonable. The possibilities are huge and really depend on your prognosis for google. Or just buy it back and move on. Like puretrader, I wouldn't want to stay naked for long :).
    daddy's boy
  5. Well, I'm probably the last person you should listen to,
    but if you don't need to free up any margin, I'd sit on it until GOOG
    closes in the mid 480's. It sure looks strong here.
    I watch it everyday and have several OTM credit spreads on it...
    above and below it.
    I dunno....
    If you want to free up some margin, buy the 460 puts,
    otherwise I'd let 'er ride....

    Just my opinion...
  6. nice trade on the SPX exp week Arnie :p
  7. I'd rather be lucky than good any day...

    that was just dumb luck...:)
  8. I had an order in today to close it for $4.00. I think it came within a dime but never got filled. Luckily GOOG was up today. I'll check it out tomorrow.

    Arnie, wouldn't your OTM credit spreads be considered Iron Condors? That's how I got into this position in the first place (posted on another thread some time ago). I sold an IC, 420/430/440/450 IIRC. GOOG reported earnings and the stock took off. I let the short call be assigned, so I was short the stock. Then I tried to collar that. I sort of panicked on Oct expiration. I was afraid I wouldn't be able to sell my long call at the end of the day so I collared it too early and too wide. Then the stock took off again to almost 500 and I got tired of playing with it, so I covered the stock and sold the call. I just about broke even except for that dang short put that I still have.
  9. Well, don't forget, I'm not the sharpest knife in the drawer around here..

    Yes, I guess they're Iron Condors.
    I didn't place them at the same time though.
    On 25 Oct, I went S 7 540/ L 7 550 Calls for .55.
    On 31 Oct, I went S 7 430/ L 7 420 Puts for .30.
    On 8 Nov, I went S 7 450/ L 7 440 Puts for .55.
    On 9 Nov, I went S 10 510/ L 10 530 Calls for .50.

    When you say you "sold an IC, 420/430/440/450 IIRC",
    I'm not sure what that means...you don't mean
    L420/S430 Puts, S440/L450 Calls, do you?
    If so, man, that's too tight!
    That can't be what you mean...:confused:
  10. Yup. I guess it was a little tight, especially with earnings the Thursday before expiration.
    #10     Nov 17, 2006