PUT options liquidated at worst possible prices

[blackjack007]

Quote from stefan_777:

You shouldn't be trading options, because you have no idea what you're talking about.

There are no "naked" puts in cash accounts. The requirement for "put strike price" for the cash account means that you have to have a cash balance big enough to cover the put fully in cash in case of assignment by the amount of the strike price. In plain language that means you have to be able to go long in cash when the put is assigned. Effectively making it a cash-covered put, that is not naked.

Go away, I'm not going to sit here and teach you options.

lol, you're making a fool out of yourself. you don't know what a naked put is. a cash secured short put can still be naked. covering a short put means selling the underlying -- it has NOTHING to do with the amount of cash you have. you can have 1 trillion dollars in your account and sell one SPY put and it's still considered naked. only when you short SPY does it become covered.

yes you can have a naked put in a cash account (if the broker permits it).

it seems like you're the one who needs to read up on options.

 

[Whistlingleaf]

Not to change the subject but,

Stefan you can have cash secured naked puts in cash accounts like IRA accounts if you have a large enough account.

I dont know if this is true at IB, but you definitely can do this with other brokers.

 

[jimrockford]

Quote from hippie:

Cash accounts do not get margin calls or liquidation bots closing your position. It just disallow you to open the position in the first place if the cash isn't there.

This is definitely not correct. See http://individuals.interactivebrokers.com/en/p.php?f=tradingConfiguration, and then look under Account Types, and then under Cash, where it is made very clear that IB cash accounts are subject to liquidation for margin violations.

 

[stefan_777]

Quote from blackjack007:

lol, you're making a fool out of yourself. you don't know what a naked put is. a cash secured short put can still be naked. covering a short put means selling the underlying -- it has NOTHING to do with the amount of cash you have. you can have 1 trillion dollars in your account and sell one SPY put and it's still considered naked. only when you short SPY does it become covered.

yes you can have a naked put in a cash account (if the broker permits it).

it seems like you're the one who needs to read up on options.

You idiot. Covered and naked are two opposite things. You can cover a short put with a short position or with cash. At the point it's covered by either the position or cash, I wouldn't call it naked anymore.

It would be called a covered put (in the case of the stock position) and cash secured put or cash covered put (in the case of cash covering the short put)

I think it's sloppy and contradictory to say "I have a cash-covered-naked-put" in the same sentence. It's an oxymoron. Look that up please. I don't care who uses the term, it's mindless.

When I say a put is "naked", I mean that there isn't enough short stock or cash to "cover" the short put completely. That's the usual sense of the word "naked".

All we're talking about here is terminology now. It's ridiculous and getting stale.

 

[newguy05]

Why does ET have to turn every thread into a shitshow, this subject started with some useful info that can benefit anyone who just started using IB, troll or not. Now it has degenerated into pages of useless penis comparison.

Can you people just shut the fuck up and either let the thread die while still on topic or if OP decide to come back and post. So anyone looking for some details dont have to wade through 10 pages of your shit.

 

[stefan_777]

PM the OP to dish out some news.

We're all here to see what happens. Some of us want to see a lawsuit, others want to defend IB at all costs, I'm here to be entertained. Everything is just idle talk until then.

 

[jimrockford]

Quote from stefan_777:

You idiot.

***

All we're talking about here is terminology now. It's ridiculous and getting stale.

Stefan_777,

it was you who introduced this terminological dispute. We have been discussing it because your entire argument depends on whether your terminological argument is correct. Perhaps this will settle the matter for you, from IB's website at http://individuals.interactivebrokers.com/en/p.php?f=tradingConfiguration, then click "Account Types", and then click "Cash":

Quote from Interactive Brokers:
Naked put writing is also allowed, but the funds must be available and then are restricted.

So this provides further confirmation that IB does permit naked puts in a cash account. It also shows that even IB disagrees with your terminology.

 

[stefan_777]

Mindless like I said.

They can call it naked put that happens to be covered in full by cash if they want. I don't care, you just won't see me using contradictory terms.

from Interactive Brokers:
Naked put writing is also allowed, but the funds must be available and then are restricted.

Earlier, you wanted to use the term Naked Put as an excuse that they liquidated a supposed cash account. Well thanks for providing the quote, because it says the cash for this "naked put" has to be available and is restricted, so there's no reason to ever liquidate. There, you've defeated yourself. Thank you.

 

[blackjack007]

Quote from stefan_777:

You idiot. Covered and naked are two opposite things. You can cover a short put with a short position or with cash. At the point it's covered by either the position or cash, I wouldn't call it naked anymore.

It would be called a covered put (in the case of the stock position) and cash secured put or cash covered put (in the case of cash covering the short put)

you basically have several people here and links to IB telling you that you're wrong, and you still think you're right because you cling to your own personal defintion of certain terms. you cannot cover a short put with cash, end of story. the broker considers it naked until you short the underlying. if you don't like it, tough. that is how the industry considers covering a put.

sounds like you're the only idiot here

 

[stefan_777]

Quote from blackjack007:

you basically have several people here and links to IB telling you that you're wrong, and you still think you're right because you cling to your own personal defintion of certain terms. you cannot cover a short put with cash, end of story. the broker considers it naked until you short the underlying. if you don't like it, tough. that is how the industry considers covering a put.

sounds like you're the only idiot here

Here you go fuckhead, here's what the industry has to say.

Learn to write too. Looks like you took English class through an instant messager.

Covered put
A put option position in which the option writer also is short the corresponding stock or has deposited, in a cash account, cash or cash equivalents equal to the exercise price of the option. This limits the option writer's risk because money or stock is already set aside. In the event that the holder of the put option decides to exercise the option, the writer's risk is more limited than it would be on an uncovered or naked put option.
Copyright © 2004, Campbell R. Harvey. All Rights Reserved.


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Covered Put
A situation in which an investor writes a put while holding an equal and opposite position on the underlying asset. That is, an investor has a covered put when he/she writes a put and has enough cash to cover the strike if the put is exercised, or if he/she has short sold the put. It is thought that utilizing covered puts (and covered options generally) is a beneficial tactic because the investor may profit from the option premium if the option is not exercised and is less likely to suffer a loss if the option is exercised.
Farlex Financial Dictionary. © 2009 Farlex, Inc. All Rights Reserved

Uncovered put
A short put option position in which the writer does not have a corresponding short stock position or has not deposited, in a cash account, cash or cash equivalents equal to the exercise value of the put. The writer has pledged to buy the asset at a certain price if the buyer of the option chooses to exercise it. Uncovered put options limit the writer's risk to the value of the stock (adjusted for premium received.) Also called "naked" puts.
Copyright © 2004, Campbell R. Harvey. All Rights Reserved.


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Uncovered Put
A put option one writes without having the cash available to purchase the underlying asset should the put be exercised. When one writes a put option, one sells a contract giving the buyer the right to sell the underlying asset to the writer at a given strike price. That is, should the holder of the put exercise the option, the writer must buy the underlying asset. One writes an uncovered put option generally if one does not expect the option to be exercised and wishes to simply collect the fee from selling the put. If the option is exercised, the writer must sell other securities or somehow find the cash to buy the underlying asset.
Farlex Financial Dictionary. © 2009 Farlex, Inc. All Rights Reserved

I'm sure I can dig out more definitions from financial dictionaries, but this only took a two second search. Try it sometime.