Liquidity problem..

A

anthony

I have been trading options for a few years now, mostly catalyst driven & high implied volatility set ups.

Recently a bad situation has emerged and I am not sure how to handle it (never has happened to me before). Going into CDW's earnings report a few weeks, I opened a vertical spread. Volume & open interest was at a comfortable level at the time. March 15 expiration.

I covered my puts that were closer to ITM at a profit, but have not been able to sell my puts that were more OTM. Every day I have tried selling the puts, but I have had no fills. I am worried that I am not going to be able to sell them and be forced to exercise them in 30 days or whatever at an enormous loss..

What options do I have? Is it possible to merely give them to some market making firm? I would frankly pay someone to take them..
 
Clearly I didn't understand this post. Of course there is no risk of "an enormous loss" when you exercise OTM puts because if they're out of the money, you wouldn't exercise them.

So either they're actually in the money and what you're worried about is having to pay the commissions associated with buying the stock, exercising the puts, and then selling the stock, or you're worried about the time value of the OTM puts decaying over the next 30 days.

Is it one of these?
 
TooOldForThis said:
Clearly I didn't understand this post. Of course there is no risk of "an enormous loss" when you exercise OTM puts because if they're out of the money, you wouldn't exercise them.

So either they're actually in the money and what you're worried about is having to pay the commissions associated with buying the stock, exercising the puts, and then selling the stock, or you're worried about the time value of the OTM puts decaying over the next 30 days.

Is it one of these?
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I am not really worried about the theta decay, I just want to get to get rid of the contracts. I am concerned because I don't know if anyone is going to buy them from now until expiration, there is barely any trading & liquidity. I don't to wait until March 15 and have them auto exercise.

Its not even that far out of the money, the stock is trading at around 37.7 and they are 30 March puts.

Suggestions?


EDIT: Am I just a complete idiot? If the price of the stock at expiration and the strike of the option is 30$ then it does not automatically exercised? I thought at the contract's expiration it is automatically exercised?
 
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MrN said:
"Am I just a complete idiot?"

Yes, I'm afraid so.
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That is fine haha, I am happy that it does not automatically exercise then.

I have always collected extrinsic value / time premium before expiration. I know calls/puts give the option, but not the obligation, to buy/sell the underlying at a future date, but I assumed if you held them until expiration that they would auto exercise. Very good to know. Thanks haha.
 
anthony said:
But have not been able to sell my puts that were more OTM. Every day I have tried selling the puts, but I have had no fills.
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No need to waste your time trying to exit the position. Just submit the following order.

  • Limit Order: Sell at $0.01
  • Good Until: March 20, 2015

:)
 
anthony said:
I have been trading options for a few years now, mostly catalyst driven & high implied volatility set ups.

Recently a bad situation has emerged and I am not sure how to handle it (never has happened to me before). Going into CDW's earnings report a few weeks, I opened a vertical spread. Volume & open interest was at a comfortable level at the time. March 15 expiration.

I covered my puts that were closer to ITM at a profit, but have not been able to sell my puts that were more OTM. Every day I have tried selling the puts, but I have had no fills. I am worried that I am not going to be able to sell them and be forced to exercise them in 30 days or whatever at an enormous loss..

What options do I have? Is it possible to merely give them to some market making firm? I would frankly pay someone to take them..
More...

The open interest is only 170. They went out today 0.00/0.15. Was that your offer at $0.15?
 
to anthony:
So you are long put OTM options... you can just "lapse" them during last trading day, or let them expire worthless. If you are not able to close your long option position, it just means, that there is nobody interested in buying them for the price you request. Thats all.

I would like to buy your options for negative price (so you will pay me and give me your long options), but this is (sadly) not possible :) Write me PM.
 
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