This is not a ShortNakedPut, but a CashSecuredPut.
Broker silently changed the conditions...
- Thread starter earth_imperator
- Start date
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.
But this is where the broker is operating from; it's not extraneous. This is where the cash requirement is coming from; it's not the screw the put seller like what OP thinks; it's to cover the obligation that the put seller has to the put buyer and the potential risk to the broker in case if the put seller is not able or willing to fulfill his obligation. The broker is not requiring more from the put seller; it's not demanding OP to put in strike + premium, just the strike that's it because that's what the OP will be responsible for should the underlying goes to zero. This is what OP fails and refuses to understand. He's always thinking about himself, how he's getting screwed, how everybody is out to get him, how he's not able to make money blah blah blah.
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 obligation to the seller.
To be fair the OP understands all of that.Look at it from the put seller's point of view. What he is objecting to is that TDA,his broker, has a requirement that is NOT customary in the industry.Other brokers allow immediately the premium received to meet partially the cash requirement.
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You must not be reading my posts carefully enough, or perhaps I'm writng them clear enough.
If a person has a cash account of say $1000 and they sell a $4 put for $1, the amount of money they are left to trade with until they cover that short is $600.
Everything else is a discussion of semantics.
$400 is locked up.
$100 is what their credit was, and $300 comes out of their settled cash.
I mean I hate to say this.. but case closed.
That's the way it works.
You are falling into this idiot's trap.
What @TheDawn posted to me was true.
Here's an example, because I went back and read his his first post.
He starts a thread, and by the end, he's calling people here dumb/children/stupid, etc. People that have been here 15 years or more. He asks a question, and then when people help, he tells THEM the answer.
https://www.elitetrader.com/et/threads/percent-calc-problem.367298/page-6#post-5606819
So, can one say that it's just temporary? Ie. with a lag of 1 day (settlement time) the net cash requirement reduces?
We have to differentiate between placing the order and filling the order. At each of these steps a different cash requirement is in effect, IMO. I rather think it reduces as soon as the order gets filled, as I already wrote here.
I asked this same question the support, but still waiting for an answer. I guess they first need to read the source code of the system to know the answer...
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I don't care what he is implying.
From TD's own website:
In a cash account, you will be required to hold enough cash to buy the underlying security if assigned. The typical option contract represents 100 shares of stock, so in the example above, you have been required to hold $9,700 ($97 x 100). This cash cannot be used for other account activities until the short put position is closed
In this case the guy sold a $97 put.
What part of... "you have been required to hold $9,700 ($97 x 100). This cash cannot be used for other account activities until the short put position is closed" is hard to understand?
This guy's an idiot.
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.
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.
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