Put options and bankruptcy?

Thanks M. Just curious. I'm usually a buyer of volatility for speculation. Haven't sold much in the past and never to the bottom.

PS - You must have a smile on your face hearing about us battle it out with mother nature in the NE. :D

Quote from metooxx:

More than you want to accept.

Dumb idea; I have seen a lot have people not survive this idea ...
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Quote from DTK:

Does anyone know what the downside risk (besides being able to hold on through the volatility on the way to 0) of being short calls when a company goes bankrupt is?
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As long as you have enough margin to meet margin requirements you would just ride out the short calls until expiration.
 
Quote from DTK:

Thanks M. Just curious. I'm usually a buyer of volatility for speculation. Haven't sold much in the past and never to the bottom.

PS - You must have a smile on your face hearing about us battle it out with mother nature in the NE. :D
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Just sand blowing in the Bahamas ...
 
Quote from metooxx:



Just sand blowing in the Bahamas ...
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What about those melting polar ice-caps and the beachfront properties all around the world?
 
Quote from aphexcoil:



What about those melting polar ice-caps and the beachfront properties all around the world?
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We will move if the water gets too high ...
 
Quote from def:

You do not have to wait for expiration and the OCC and the 75 cent auo-exerices to exercise an option.

In this case if you exercise your put, you have the right to sell the stock to the buyer at the strike price. You'll ofcourse end up short the stock (assumning it is borrowable). If it's delisted, naturally you don't have to buy it back. However, if not, it's probably best that you pay the penny or two to cover.
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its not necessarily best to cover.if you don't cover its not a gain for tax purposes.if the company goes bk and you never cover its a tax free gain if you are not a mark to market trader.
 
Quote from vhehn:



its not necessarily best to cover.if you don't cover its not a gain for tax purposes.if the company goes bk and you never cover its a tax free gain if you are not a mark to market trader.
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Huh???
 
Sure... I'll worry about that at the same time I start to worry about the the efficient market hypothesis ever becoming reality. :D

Quote from aphexcoil:



What about those melting polar ice-caps and the beachfront properties all around the world?
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