As far as i know the commission is zero for trading stock option such as trading stock in some brokers. There is a put option,exercise price is 2.5 USD, option premium is 2 USD,i have only 10000 USD cash in my account. 1. Can i short put 200 contracts? 10000/(2.5-2)/100 = 20000/100 =200 contracts It is a simple classic short cash-secured put strategy. 2.If the option premium rise to 5 USD,what will happen? For a put option ,it is nonsense that option premium is larger than its exercise price.But if the trader have large amount money ,they can buy it at any price. On April 21, 2020, the price of May WTI crude oil futures on the NYMEX fell to -$37.63 per barrel. It is possible that the option premium rise to 5 USD. So when the option premium rise to 5 USD in this case,my account will be forced liquidation and all cash lost? The earning in my account maybe is 200*(2-5)*100 = -60000? Or i can just do nothing ,waiting someone to exercise the put option?
I wonder if you are the same person asking the same question or if there are so many people around with the same obsession. Try to rephrase it by fixing the all in plus credit margin nonsense and maybe... maybe... you'll get a reply.
idk but seems a $2.5 stock would be cash secured requirement so you would be force liquidated (unless some other action taken by you). I’d guess a forced liquidation would occur much sooner than your broker eats a $40K loss, iow you will be liquidated much before the stock reaches $5.
https://www.tradestation.com/pricing/options-margin-requirements/ The required cash for Cash-Covered Put Short Put : (Strike Price x Multiplier x Contracts) — Premium Proceeds For the put option,exercise price is 2.5 USD, option premium is 2 USD,i have only 10000 USD cash in my account,the required cash in tradestation is 50USD per put contract. What i care about is that if option premium rise high than strike price when someone manuplate the option market ,what will the broker do? For put option,premium rise high than strike price ,will result in negative account value.