PUT options liquidated at worst possible prices

[def]

Quote from stefan_777:

Thank you for touching base. This thread became quite ingrown without any official word.

Anyway, do you know what caused the liquidations if it wasn't option price?

I do know that it was currencies but I don't know the specifics and thus am not really comfortable commenting further on the subject. Hanabi418, I'm guessing someone will get to your ticket today but if you PM me with the number, I'll see if someone can look at it tomorrow (I say tomorrow as I am based in Hong Kong and given the hour, am signing out for the night).

 

[hanabi418]

Hi Def, thanks for your help. My ticket no. is T609160

I m from SG so we are in the same time zone.

 

[Trader666]

Try engaging your brain instead of parroting what you think others might consider. If you're short a put your risk is limited, therefore it absolutely CAN be covered with cash alone. Whether or not someone or some entity considers it covered doesn't change the reality that it is.

Quote from blackjack007:

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.

 

[atticus]

Quote from def:

Given how this thread is full of innuendo I do want to point out the liquidations were not due to option pricing.

The OP had positions other than a base currency and those verticals?

 

[zdreg]

nobody will comment on an individual case. be reasonable.

 

[stefan_777]

Quote from zdreg:

nobody will comment on an individual case. be reasonable.

he said "handful"

De Nile, Egypt.

 

[atticus]

Quote from zdreg:

nobody will comment on an individual case. be reasonable.

It's rhetorical. Def has stated there were other positions which forced the liquidation. This thread should be deleted.

 

[Jerkstore]

Quote from Trader666:

Try engaging your brain instead of parroting what you think others might consider. If you're short a put your risk is limited, therefore it absolutely CAN be covered with cash alone. Whether or not someone or some entity considers it covered doesn't change the reality that it is.

You are arguing semantics. Unfortunately, businesses are forced to use legal terms by the official definion of those terms, as defined by the regulators.

Your concept is correct, but your use of industry verbiage is not. The industry requires enough cash in an account holding short options to cover the haircut/margin requirement. You are simply saying that with enough cash, you could cover any potential future haircut requirement, which in concept is quite true.

That does not change the fact that cash vs short put is not, by definition, considered to be a covered position. A covered options position does not require extra cash, past the purchase price, to hold.

 

[Jerkstore]

Quote from jimrockford:

This isn't true. If an option spread is American style exercise, and the short leg is assigned prior to expiry, and then the underlying subsequently moves against the long leg before it can also be exercised, then there can be a loss far greater than the premium paid + commissions.

This would only be true if the options are cash settled. Since SPY expires into the underlying ETF, the only difference in the P/L for an assigned put (or long stock) vs short put would carrying costs.

 

[Trader666]

Actually YOU'RE the one arguing semantics. I didn't misuse industry verbiage, I simply pointed out the real world reality that cash can absolutely cover short puts, no matter what the definitions are.

Quote from Jerkstore:

You are arguing semantics. Unfortunately, businesses are forced to use legal terms by the official definion of those terms, as defined by the regulators.

Your concept is correct, but your use of industry verbiage is not. The industry requires enough cash in an account holding short options to cover the haircut/margin requirement. You are simply saying that with enough cash, you could cover any potential future haircut requirement, which in concept is quite true.

That does not change the fact that cash vs short put is not, by definition, considered to be a covered position. A covered options position does not require extra cash, past the purchase price, to hold.