Brokerage Closed OTM Bull put spread

Is it just me or does it seem a wee bit aggressive for "a new trader,mistakes abound" selling 200 AMZN 1865-1860 put spreads for .425??

If nothing else,you got some big gonads



Bigwheel777 said:
Ok - I know this is an old topic, but given the confusion I've seen on past threads, I wanted to revisit it and understand it.. cuz it just happened to me. I'm a new trader, mistakes abound, and I want to learn from the best.

I had a bull put spread on AMZN 1865 1860 - 200 Contracts last Friday - max profit about $8500. Stock started heading down towards end of day, but never crossed 1865, and closed at 1869. Note that after hours it stayed around 1869.

Broker closed the OTM spread position around 3:42... which cost me about $9400 - so my net loss was about $900 and I lost the $8500 max profit had the trade been left alone.

I've read earlier posts about assignment risk and notional values.

I called the Broker several times and they kept positing the example of "what if" AMZN crossed to 1863. The 1865 shorts would be assigned and I would be long 20,000 shares at 1865 which would create a margin call of $37,300,000. So in that scenario, why couldn't the account simply sell the 20,000 shares I now have for 1863... manifesting loss of $40,000... which my account could easily handle.
More...
 
I very wrongly thought my max loss was capped at $100,000 (spread x 200 contracts) - I know otherwise now on physical settlements (vs cash settlements).
 
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