Search results

Thanks for the update. :D

Selling the option and receiving premium is settled simultaneously.

Tasty trade is correct.

If you enter a limit order to sell the broker knows with 100%certainty whether you have enough cash in the account. Premium received is cash like any other cash in your account. +It has been correctly pointed out by Van.. that the cash must be equal to the strike price in a cash account.

I deal in reality. People post wrong information. It happens to even the most knowledgeable because they can not know everything or their perception of reality is not 100%. My post above describes the situation as it is. Objective people will then accept the reality.Those with a stake in an...

yes, but a broker can require more which is the point the OP has successfully made. Your circled words has been repeated numerous times and no one had disputed them. The op correctly has pointed out that the premium received reduces the existing cash in the account needed to support an...

Again you are correct. The thought occurred to me also. However the practice at other firms is to recognize the premium immediately and is not an issue because the premium received and the the sale ofoption is one transaction

NO at TDA because the $100 received is not recognized till the next date.

Again no disagreement. the OP is saying that he needs $400 already in his account to meet the requirements. Other brokers say that he only needs the $300 in the account+the $100 premium from the sale of the option. Then the two figures are required to be maintained till the position is closed.

No disagreement. The OP is saying something else if you read what I wrote. On trADE date the premium received is being ignored by TDA as being of no consequence. This is the concern of the OP.

The next day the OP is implying that the premium received is not really his till the next day. Therefore on the trade date T DA is requiring more cash day one in the account than other brokers.

Of course that is correct. You are misinterpreting my post. The requirement in a cash account is met through cash in the account +the premium received. the Put seller can than use that cash to meet his obligations to the seller. The premium received is his property which he can use to meet his...

We agree.We are talking about the put seller and their requirementsin a cash account. Bringing in the put buyer is extraneous to the question of the Original Poster.

That is not correct in a cash account. There cannot be any additional required even if the stock goes to zero There is a different issue regarding the possibility of early assignment and the customer ends up with a loss. That is a discussion for another day.

A $10 put will not be selling $10.70 unless the stock was near zero. You are correct. The cash received is subtracted from the cash secured requirement but it has to stay there to meet the initial requirement unless you have additional cash in the account.

It is a problem. Broker-dealers can make their own policy which can disadvantage you. Seriously, you need to be polite in your responses. Otherwise people will attack you even when you are right.

The required amount is as follows:. In a cash secured account WHICH IS THE CASH ACCOUNT it is the strike price X100 minus WHATEVER YOU TAKE IN FROM SELLING THE OPTION. e.g.1 strike price at 6 stock at 8 option price at 1 the account must have $500 in the account e.g. 2 strike price at 6...

You have lost $399 minus premium received.