Moron . Naked put options otm Friday. BUT stock price went down after hours...interactive brokers

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pointbob

I swore I'd never be one of those people asking advice on the web but here I am. I screwed up and need some insights.

I did a naked short on a stock. Closed at 419 on at friday. My otm put was 405.

at 415 pm bad news hit after hours and the price went down to 390. I'm exposed to a lot here. STUPID>

I'm with interactive brokers...shows i'm -$XX,XXX in my portfolio based on after hours price decline...

It's fri nite and i'm uncomfortable....stock is TSLA.

Will i be exercised for sure? Anything i do - can i call the brokerage and plead stupidity? any ideas or strategys

thank you
 
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Most people will tell you to just get out with a loss and start over, think of a new trade.
Though everyone who ever sold TSLA shares regretted it later, because they couldn't get it again at a lower price :-) So how about owning TSLA shares for a while? Or rolling your put - buying that one back at a loss and selling another one for longer term with more premium?
BTW, when does your put expire?
 
pointbob said:
Will i be exercised for sure? Anything i do - can i call the brokerage and plead stupidity? any ideas or strategys
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I read your post several times and didn't seen an expiration. The further out it is the less likely, in reality, you'll have stock put to you.

Certainly you should prepare for it. Unfortunately ignorance is not a defense - at least for us retails. Surely if you were an institution you could whoopsie your way out of it. But perhaps if you were you wouldn't have gotten into this predicament in the first place! You could try to roll but that could just double down on your losses. Sort of like martingale blackjack. You could try hedging it but that really doesn't help your situation much in this case. However, if you expect the losses next week to be severe perhaps it's an option.

Take it for what it is. You're naked on a rocket to the moon. TSLA has done extremely well and owning it's shares could be the best worst mistake you've ever made. Though I imagine you were looking for an easy profit. You've got a long weekend ahead of you. Best to get your ducks in order (make sure you've got the cash) and forget about it. You were trading only with risk capital...right?
 
I am sorry to hear about your situation. I am not sure what can be done other than hoping for a bounce Tuesday. I am commenting on this because I was short a put spread on TSLA, I felt uneasy I covered and I was kicking myself (I could have made money) only to find out after the close, the news hit TSLA is not going to be included in the SP500. That is why it is down. Maybe Monday the buyers come in, they always do.
 
Doesn't OCC use the stocks regular market closing price then doing the settlement? check the option contracts details. The negative amount is only what is shown on your account until settlement is finished.
 
bln said:
Doesn't OCC use the stocks regular market closing price then doing the settlement? check the option contracts details. The negative amount is only what is shown on your account until settlement is finished.
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I think so yes, but you can manually execute them till some cutoff time afterhours.

There was some discussion on ET as a strategy buying OTM right before close and execute if Afterhours move happens (and hedge with underlying for a profit).

With your negative balance it seems that your counterparty did execute them and you are long TSLA (dont they show up in your portfolio yet?).

Maybe you are lucky and the buyers didnt realize it went down AH and did not manually execute.
 
JamesJ said:
I think so yes, but you can manually execute them till some cutoff time afterhours.

There was some discussion on ET as a strategy buying OTM right before close and execute if Afterhours move happens (and hedge with underlying for a profit).

With your negative balance it seems that your counterparty did execute them and you are long TSLA (dont they show up in your portfolio yet?).

Maybe you are lucky and the buyers didnt realize it went down AH and did not manually execute.
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He didn’t provide expiration date so those points are... pointless.
 
JamesJ said:
Everything other than Friday Expiration makes no sense... He could imho not go negative on longer dates on such a small move (5%).

Pointbob?
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Selling longer-term put would make him temporarily lose not only the $amount TSLA went down ($3k), but also the put premium would increase - could be another $2k that he’d have to wait till expiration to erase. If he sold that put for $1K, Tuesday it might be -$6K, for example.
I can come up with thousands of scenarios for unknown puts. See how much can be speculated without details?
 
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