Might Be in Trouble: What happens when a Naked Put Expires?

[destriero]

He sold the puts at 0.07? $5.4 net? He mentioned a credit of $380 so I assume he means net of commission.

 

[destriero]

Your trade cost you $37800, not $380, if you traded 70 contracts.

He didn't sell the puts at 3.8 per. He's referring to the proceeds from the 70-lot from 5.4 net per contract.

 

[zghorner]

He didn't sell the puts at 3.8 per. He's referring to the proceeds from the 70-lot from 5.4 net per contract.

Bingo.

 

[krugman25]

Yes, agree with other posters. Your maintenance is usually about 1/4 to 1/5 of the notional value of the contracts. If the notional value was 130k, there is no way you put that on for 380 dollars. Move the decimal place to the right a few times.

 

[zghorner]

oh shit HAL is at $19.02 currently. Going to hold strong for the time being.

 

[zghorner]

Yes, agree with other posters. Your maintenance is usually about 1/4 to 1/5 of the notional value of the contracts. If the notional value was 130k, there is no way you put that on for 380 dollars. Move the decimal place to the right a few times.

I shorted 70 put contracts. The price was $0.054 per put each contract represents 100 shares of underlying so $5.40 per contract X 70 = $378 in premium that i collected and will keep if it expires above $19.

if those contracts expire under the strike price then i will have to buy those shares as i understand it. With 70 contracts that is 7,000 shares @ $19 strike so $133,000.

If i am wrong please let me know.

 

[jys78]

Wow lol like others have said there are some missing decimal points somewhere here. What was the actual initial contract price? I am thinking it had to be 5 cents, not 5 dollars unless you sold years ago or something!

 

[zghorner]

Wow lol like others have said there are some missing decimal points somewhere here. What was the actual initial contract price? I am thinking it had to be 5 cents, not 5 dollars unless you sold years ago or something!

Each contract was $5.40 which was the put price x 100.

 

[destriero]

I don't know who you're clearing, but you're going to need $66,500 clear on Monday. I assume that your broker may buy to close the position prior to today's bell if you're not able to fund the assignment.

 

[zghorner]

I don't know who you're clearing, but you're going to need $66,500 clear on Monday. I assume that your broker may close the position prior to today's close if you're not able to fund the assignment.

I’m going to close it out today unless it skyrockets in the next few hours...too close for comfort.