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If the option trades below parity (at a discount), there's a good chance that you'll be assigned early. As long as there's time premium remaining, it's unlikely - it happens but very infrequently. The discount can occur with very deep ITM options and sometimes with pending dividends.

Is this a general question about something you're looking at or is some new restriction/rule being implemented?

You got it! It's a better deal to mortgage the house for 2 cents per contract!

There are just short of 3,000 optionable stocks. A normal distribution will place dozens within 5 cts of a pin at each strike. A few will even pin to the penny. And a similar number will be found 10 cts away and 20 cts away, etc. and even mid strike. If you plot all of them, you're not...

As Mark indicated, the Pinning Effect is a myth. Many talk about it on these and other BB's but no one ever gets it right until after 4 PM on expiration . Stocks do get pinned but not outside the normal distribution of stocks across all prices.

You're not missing anything. That's the nature of ratio spreads. You have a high probability of keeping the small credit that you receive but you also have the potential for a big loss if the sh*t hits the fan. GOOG offers and even better credit for a 2:1 ratio at half the current price...

Suggestions are going from bad to verse. An OTM put trading near a nickel and about to expire is going to provide a lot of protection. Uh huh.

If it's your intention to close the option position by the end of the day, place an order first thing in the morning to buy the call back at a desirable low price. Sometimes you'll get hit during the day as people look to salvage something for their near worthless long positions or closing out...

{_x_} Yep, it's a moon alert!

It's a lot more fun to run someone around in circles with convoluted descriptions than to actually provide real numbers that support the "maths" premise. Kinda reminds me of another BB. It appears that Houdini has left the BB-Ba-building.

Well, if you thought that you were an expert then I suppose it wouldn't be a compliment. But if you're just a very knowledgeable sharing his experience then it is (am I off the hook?) Keep the faith! :)

I'm a first time user of Tradelog (printing my 2008 Sched D as I type) and I think the program is great. I posted my experience with it on another BB: http://www.elitetrader.com/vb/showthread.php?s=&postid=2295678&highlight=tradelog#post2295678 The only complaints I have are: 1) I...

Is there a full moon tonight?

Mike007, See the link in my previous post for determing margin requirements.

Here's your example: Instead of telling people they're wrong, tell us at what the stock price, volatility, etc. must be where one will be unable to "stay in the position" (the short put). Detail all pricing components necessary to calculate the margin requirement. You can use the CBOE Margin...

Thanks for providing the link and clearing that up.

Not only is virtual trading a night and day difference from live trading but hindsight also generates the best answer. TWORIP needs to understand more about the behavior of options in order to comprehend that you can't roll your way out of bad positions. Rolling is a losing battle unless...

This is a ridiculous example and question. How could they be equal? Initial margin on stock is 2-1/2 times that of the naked put, before premium adjustments. Do you have any idea what cash secured means? The initial cash secured amount for each of these isn't the same. But the difference...

PS LOLOL. It would be helpful if you did the same.

It was a cloudy Tuesday many years ago just before the spring thaw. The sun was bright, radiating across the tundra (I was trekking across the Steppes). I was thinking about naked put margin and it was a light bulb moment. I said to myself, "I can't wait until riskfree enlightens the Elite...