Exactly! That's the core of the problem.
Broker silently changed the conditions...
- Thread starter earth_imperator
- Start date
I know... so why are we even discussing it.
And in reality... its so frigging laughable because anyone who calls themselves an "option expert" in this game doesn't have to f'ing worry about an extra $380 being f'ing locked up for god sake.
Would somebody please hold a seance and resurrect the ghost of @destriero?!!!
I will send Baron a $100 bill to give to the charity of his choice tomorrow, or to a needy person on the streets, if D comes out and rakes this idiot over the coals. I'll mail tomorrow morning.
Well... tell the "options expert" thats because options settle T +1
Of course he has to wait until the next f'ing day for the funds to clear.
So yes... after he makes the trade, $400 of his actual cash is locked up until the next f'ing day.
Dude... he is a rookie.
NO at TDA because the $100 received is not recognized till the next date.
Hmm. this is indeed another plausible explanation for the observed behavior... But still different from other brokers.
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
There is still a "bug" in the TDA system as follows: one can use even the unsettled cash for opening a new trade as long as one does not close it on the same day. Therefore TDA does it definitely wrong with its restriction as it does not allow to use the credit one receives on the first day. Q.E.D.!
https://support.tastyworks.com/support/solutions/articles/43000435231-good-faith-violation-gfv-
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The premium is SUPPOSED TO BE ignored by the broker because the broker doesn't know beforehand how much the premium you are going to sell the put for. (Edit: Like @vanzandt said, the transaction for the buying and selling of the option is not going to settle until T+1. So how is the broker going to decide how much cash you need to pledge for the position at the time when you enter the position?) What if you sold the put for $1,000 (in a very extreme and unlikely case) and the strike is $1000 so you don't have to have any money in the account to trade if the broker's cash requirement is strike - premium? The cash requirement is the amount of cash that the broker, before you sell anything, requires you to have ready in your account which is = Strike X num. of contracts X 100. That's why the put is called CashSecured Put meaning that you always have all the cash ready to settle for the maximum possible of obligation on the put which is the Strike Price X num. of contracts X 100.
OP's concern is completely unfounded because he doesn't understand how options work and the risk involved in trading options and how the broker manages that risk. He doesn't appreciate or understand option is a business contract. To him, it's a game. And he thinks it should be played according to his rules. LOL Instead of focusing on how to come up with the best strategy to trade options, he is instead focusing on the nitty gritty things that shouldn't matter. But that's fine, if he's playing in the US market, he will just become my fodder. LOL
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No US Brokerage credits the account with the premium, to be applied against the requirement of 100% cash to cover the purchase of the stock at the strike sold, until the following day. That's an SEC rule, not an in-house policy.
To sell a $4 put REQUIRES $400 cash in the account the day it is placed.
If he had $399.99 in that account, and he attempted to sell that $4 put... I don't care if the bid was $3.99 and his credit would be $399... he can not execute that trade.
There is no discussion, no in-house rules, no exceptions.
bingo
exactly