im not sure if this is the right forum for this, but what the hell. Im looking at selling some out of the money calls on wheat, it is highly unlikely they will hit. I guess my question is on selling out of the money calls and puts, what are the risks?? Chances are they will just expire worthless meaning i get to keep my premium that i paid right??
not sure
- Thread starter Rtrader2525
- Start date
well.., selling far OTM option is nice strategy, and yes we can keep the premium if the option expired worthless. But we have to watch out very carefully with our margin, because selling option required a maintenence margin. And when the market price goes near to our strike price, the margin require with go bigger and bigger..
so make sure you play at far.. far.. OTM price, so the market price won't get you!
so make sure you play at far.. far.. OTM price, so the market price won't get you!
What if wheat makes a big move before expiration and your OTM options is now ITM... It is never as easy as it looks.
you can protect yourself by putting an open stop in the future. Though still its dangerous due to eventual locked limit up/down days. Another way is that you buy cheaper options with higher/lower strike than the written one which is good during low volatility but reduces your potential profit. Depending on the risk you are willed to take you can lets say write 3 and buy 2 or 1 or whatever. Many ways to play this.
He ran through a hundred and thirty million dollars -- his cash reserves, his savings, his other stocks -- â¦. He had to mortgage his house. He had to borrow money from his children. He had to call Sotheby's and sell his prized silver collection -- â¦.. and on and on.
A 5-year old article still worth a readâ¦â¦
