First time with options: How did I lose so much money?

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NoobTrader32

This morning 8/24 I sold 2 contracts of QQQ Sep30'15 120 naked calls. It's showing average fill price of $1.498. It's also showing a P&L of -$7,477 and a realized P&L of -$7,182.

How is it possible that I would have any loss beyond the premiums I collected which should amount to $1.498*2 contracts? Shouldn't I be sitting on a profit, i.e., the premiums I collected, unless QQQ shoots past 120 and I'm assigned? And since I have not been assigned I should have no losses?

I don't get it, would someone mind helping a noob out?
 
Can you tell us what happened? I spent time looking over this option trying to see your price you got. Those options should have been $2500 each, right?
 
For sure you are wrong somewhere. The option premium should not have changed at all in the past 24 hours. After all the strike is around 20% away from current prices. To start with I have no clue why you would ever consider selling deep out of the money naked calls. All you do is collect pennies at best and at worst you will instantaneously go bankrupt (and worse you may owe your broker more than you have in your account). What a horrible risk/reward profile.

The only other explanation would be a glitch. Take a look at the attached chart. There was most likely a (or several) bad print(s) on Aug 24. You may have gotten filled somewhere around 1.498 avg px then the price shot up further and your broker may have liquidated your position because your account could not satisfy margin requirements anymore, hence your realized loss. I believe it is a bad print and the trade(s) should be busted. I guess that is why you resolved the issue with IB?

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NoobTrader32 said:
This morning 8/24 I sold 2 contracts of QQQ Sep30'15 120 naked calls. It's showing average fill price of $1.498. It's also showing a P&L of -$7,477 and a realized P&L of -$7,182.

How is it possible that I would have any loss beyond the premiums I collected which should amount to $1.498*2 contracts? Shouldn't I be sitting on a profit, i.e., the premiums I collected, unless QQQ shoots past 120 and I'm assigned? And since I have not been assigned I should have no losses?

I don't get it, would someone mind helping a noob out?
More...
 
Last edited:
NoobTrader32 said:
How is it possible that I would have any loss beyond the premiums I collected which should amount to $1.498*2 contracts? Shouldn't I be sitting on a profit, i.e., the premiums I collected, unless QQQ shoots past 120 and I'm assigned? And since I have not been assigned I should have no losses?

I don't get it, would someone mind helping a noob out?
More...

Looks like you are asking how could you have a loss greater than the premium collected from selling naked options? The answer is you understand nothing about options but decided to sell naked options. First ask yourself why you think that when you sell an option your losses are maxed at the premium received? Did I read your question correctly?
 
This poster is clearly someone else on here (registered yesterday). I see these posts quite a bit after a big day. Whoever this poster really is, he is too scared to use his regular account to post a question that he would like an answer to in fear of looking stupid. So he creates another account, asks the question, hopefully gets a decent answer, and goes back to his original account where he probably appears much wiser and is perhaps even offering advice himself. :D
 
He is not playing with pennies, every Brokerage I've traded "Naked Puts" in I had to have $300k min equity, he's either full of %$#$ or clearly messed up! Weird!
 
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