Broker silently changed the conditions...

TheDawn said:
SELLING AN OUTRIGHT PUT REQUIRES THE TOTAL CASH-SECURED AMOUNT

EXAMPLE OF SELLING A CASH-SECURED PUT
Sell to open 6 Mar 11 puts at $0.75 = $0.75 x 6 qty x 100 = $450 credit received

6 x 11 x 100 = $6,600 cash-secured amount

https://support.tastyworks.com/support/solutions/articles/43000435285-cash-secured-put#:~:text=The buying power requirement for,buying power requirement is different

Not you too, BMK.
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The very next sentence from that webpage, which you left out, says this:

$6,600 - $450 = $6,150 buying power requirement

The following sentence also appears on that same page:

The premium received from the sale of the put can be applied to the initial requirement.

The meaning is clear. I will not respond to any further messages from you in this thread.
 
BMK said:
The very next sentence from that webpage, which you left out, says this:

$6,600 - $450 = $6,150 buying power requirement

The following sentence also appears on that same page:

The premium received from the sale of the put can be applied to the initial requirement.

The meaning is clear. I will not respond to any further messages from you in this thread.
More...

CAN BE APPLIED to the initial requirement but AFTER the first trade. I left it out because it's relevant. The first trade's cash requirement is the entire cash-secured amount is the entire strike price X number of contracts and contract multiplier.

Thanks for agreeing with me by not responding. I appreciate that.
 
I have confirmed that the proceeds from the sale of the put are applied to the initial requirement in my Schwab IRA account.

I just entered two orders as an experiment. I did not actually place either of the two orders. But the messages on the screen make it clear that one order will be accepted while the other will not.

In both orders, I have attempted to sell 2 CVNA puts with a strike of $9.00.

So the cash required to take an assignment would be $1800.00.

My IRA account only has $1778.29 in cash. You can see that at the top of both screenshots.

If the proceeds from the put were not available to satisfy the initial requirement, then there is no way this order would be accepted.

But in the first order, in which I entered a limit price of 18 cents for the puts, the order will be accepted by Schwab. At the bottom, the green button that says <PLACE ORDER> is available.

The order will be accepted because the sale of the puts will bring in $34.68 in cash (after commission), and when you add that to $1778.29, the total available cash is more than $1800.00.

In the second order, I entered a limit price of 10 cents for the puts. That would bring in $20.00. Even before the commission, it is obvious that this is not enough. When you add $20.00 to $1778.29, the total is less than $1800.00.

So the second order displays a message that says "there is not enough cash available in this account to meet the cash secured put requirement."

The premium received from the sale of the put can be applied to the initial requirement.

Doesn't mean every broker allows this. As someone noted in an earlier post, brokers can have their own requirements that exceed the requirements of the regulatory agencies.




001_Schwab_CSEP.png



002_Schwab_CSEP.png
 
@BMK, thank you for your real-world experiments at Schwab.
This is remarkable also b/c TDA is amidst of becoming part of Schwab since Schwab has bought TDA...

I'm glad that in future, ie. when TDA is fully incorporated into the Schwab company, then the CashSecuredPut will definitely have the demonstrated "InitialCashReq = Strike - Premium" requirement.
B/c currently I've the impression (from my communications with the support) that they simply don't know what the matter is as they only try to give an answer that fits the latest faulty situation... :-( Much like the spammers here. Instead of researching the situation to find the exact reason, like you did. Thx again.
 
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@earth_imperator

It is possible that you got the wrong answer from the representative, and that there was something else happening in your account at that point in time that reduced your available cash--something that the rep did not see or did not understand.

When you were trying to sell the put, did you have another open order?

Have a look at this:

https://tinyurl.com/schooaac
 
BMK said:
@earth_imperator

It is possible that you got the wrong answer from the representative, and that there was something else happening in your account at that point in time that reduced your available cash--something that the rep did not see or did not understand.

When you were trying to sell the put, did you have another open order?
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Yes, even multiple open orders, but all were limit orders. And there was really enough cash avail. And as said it's a CashAcct, ie. where everything has to be covered (secured with cash) a priori...
You have also to consider the answer of their support: they insist I needed cash that is >= strike.
Whereas I had made the experience up to that point that I needed only strike - premium.
The actual cash was below the strike, but well above "strike - premium".

I'm practicing the "fully invested" method, ie. investing all available cash, then I of course am going to the limits. But the platform system should be capable to handle this.

Have a look at this:
https://tinyurl.com/schooaac
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Thx, I think TDA updates similarly.
 
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TheDawn said:
CAN BE APPLIED to the initial requirement but AFTER the first trade. I left it out because it's relevant. The first trade's cash requirement is the entire cash-secured amount is the entire strike price X number of contracts and contract multiplier.

Thanks for agreeing with me by not responding. I appreciate that.
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Incredible. You took one correct fact and made believe that your entire remark is true. It is the taking of a true fact to make a deceptive lie. It took awhile on this thread but you have revealed yourself again.
“Paltering is when a communicator says truthful things and in the process knowingly leads the listener to a false conclusion. It has the same effect as lying, but it allows the communicator to say truthful things and, some of our studies suggest, feel like they’re not being as deceptive as liars,” said Todd Rogers, a behavioral scientist at Harvard Kennedy School who co-authored a paper with researchers from Harvard Business School and the Wharton School.
 
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This screen shot is a more dramatic example. The numbers are rather absurd, but it demonstrates conclusively that Schwab is indeed allowing the premium collected from the sale of the put to be immediately applied to the cash-secured put requirement.

This is a different IRA account, and it has only $43.60 in cash.

Schwab will allow me to sell a CVNA put with a strike of $13.50.

The cash requirement to take an assignment is $1350.00.

The order will be accepted because I have entered a limit price of $13.25.

If the order is filled, it will generate $1324.34 in cash (after commission). That amount, when combined with the cash balance of $43.60, is sufficient to satisfy the cash-secured put requirement.

003_Schwab_CSEP.png


But if enter a limit price of only $13.00, then it's not enough, and the order is rejected:


004_Schwab_CSEP.png
 
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