Selling option and taking profit question

[riskarb]

Gotcha. The margin req is approx. 3% on CME fx futures options. Permissions for futures accounts allow for naked shorting of options, provided you have a sufficient margin deposit.

SPAN margin is based on the implied-distro, but for sake of argument you can base the margin req on:

option delta * futures margin = option margin for short sales

 

[cloned777777]

Dont you think covered is the best way to go about doing it.
using leverage of 1:100, i simply go long to cover the sold options. ( risk = price drop from my position)..

no margin call at all !..

but what i am saying is that
if i am only allowed to sell covered options, and uppon taking profit from the price movement in my favor ( 1.2110 up to 1.2240 )
..by taking profit i am selling the position used to cover the sold options ... and are they gonna close my sold option position at loss since it is now naked ( remember i am only allowed covered option selling or will they leave it naked, for say, 24 hrs..

 

[MajorUrsa]

Quote from cloned777777:


but what i am saying is that
if i am only allowed to sell covered options, and uppon taking profit from the price movement in my favor ( 1.2110 up to 1.2240 )
..by taking profit i am selling the position used to cover the sold options ... and are they gonna close my sold option position at loss since it is now naked ( remember i am only allowed covered option selling or will they leave it naked, for say, 24 hrs..

I still don't get it.
If you're allowed to have naked options you are allowed to, if you're not you're not. What's so difficult?

Ursa..

 

[cloned777777]

I am not allowed.
i am only allowed to sell covered options. !

and uppon unloading my long position , to take profit, I will now have naked position momentarily....

FYI: naked position has unlimited risk ..and 2% is too high as oppose to using 1:100 to go long with limited risk

 

[MajorUrsa]

Quote from cloned777777:

I am not allowed.
i am only allowed to sell covered options. !

and uppon unloading my long position , to take profit, I will now have naked position momentarily....

FYI: naked position has unlimited risk ..and 2% is too high as oppose to using 1:100 to go long with limited risk

Since it says you're not allowed to sell naked calls I would assume the answer is no. How will the broker system know the position is only momentarily naked?

The best way to flatten the position is to buy same number of puts and let the whole thing expire. Or just buy in the calls and then drop the longs.

I still don't see what you're asking, really,

Ursa..

 

[cloned777777]

if i flatten it.. dont forget, i will loose money on the sold call..

to flatten i would have to buy back the sold option, eating up my profit from the long position
!!!

 

[cloned777777]

if i flatten it.. dont forget, i will loose money on the sold call..

to flatten i would have to buy back the sold option, eating up my profit from selling the long position
!!!

i have to sell the long position to profit since it went up ..

but then the sold OPTION has to be naked momentarily , till i buy back to cover it

 

[cloned777777]

I think the solution is to be allowed to sell naked options...
but then yet sell covered options.

then surung the time i am selling the long position to take profit... i will be naked ( which is ok ).

but i am not putting down 2% ..since i will be covered...and i am not taking huge risk since i am covered..

thanx for all the effort elit traders.

i like this place