Selling puts

SumJurk · Mar 24, 2004

Quote from NasdaqTrader:

Why would a broker allow only 3 put contracts on a 20 strike to be written with $50k in the account,when that is enough to cover the purchase of 2500 shares(25 contracts)?If i was purchasing $50k worth of long stock,they wouldn't care;so why would they care if i want to write 25 contracts.They're not being exposed to any risk whatsoever on 25 contracts.

That's a good question for Linda Raschke...I'll give you the quote from her interview.

"When I sold the options, I knew I would be okay as long as the stock didn't go over $55.00. Unfortunately, the stocked jumped from $34 to $65 on takeover news. Suddenly, I discovered you could lose $80,000 overnight." The New Market Wizards...pg.298

SumJurk · Mar 24, 2004

Quote from riskarb:

Your handle is apt... you'd get some respect were you a newbie, but the fact that you've been trading options "since before you(HelloDollars) were born" speaks volumes of your lack of market-knowledge and intelligence.

Lurking? Look at the post count, you illiterate monkey.

riskarb

That's it...I won't waste any more time on you.

SumJurk · Mar 24, 2004

Quote from Hello_Dollars:

Do you have any idea that the person you are referring to treats $50k as a rounding error? Why do I have this nagging suspicion that the words "stupid" and "pennyless" will be featured prominently in paragraph 1 of your undoubtedly brief epitaph?

(By the way, since the obvious escapes you, that was rhetorical.)

Same for you, (I'm not going to waste my time) just go sell your 125 options. Just don't say you weren't warned.

Cutten · Mar 24, 2004

Quote from SumJurk:

No broker in his right mind would let someone with $50,000 in his account sell 125 puts.

More likely, you'll be allowed to sell 3 or so at once.

On the vast majority of stocks, short 3 puts cannot lose $50k under any circumstances whatsoever.

Perhaps your lengthy experience trading options will allow you to explain to us why the broker would demand more collateral than the maximum possible loss?

Maverick74 · Mar 24, 2004

Will someone please close this thread, it is now becoming completely gay and useless. Get this crap out of here. Trash talking is for chit chat. You guys can measure your cocks over there. LOL.

riskarb · Mar 24, 2004

Quote from SumJurk:

That's a good question for Linda Raschke...I'll give you the quote from her interview.

"When I sold the options, I knew I would be okay as long as the stock didn't go over $55.00. Unfortunately, the stocked jumped from $34 to $65 on takeover news. Suddenly, I discovered you could lose $80,000 overnight." The New Market Wizards...pg.298

Right, unfortunately we're talking PUTS here, chief. I think we're all familiar with basic arithmetic and the risk of selling naked gamma.

riskarb

NasdaqTrader · Mar 24, 2004

Quote from SumJurk:

That's a good question for Linda Raschke...I'll give you the quote from her interview.

"When I sold the options, I knew I would be okay as long as the stock didn't go over $55.00. Unfortunately, the stocked jumped from $34 to $65 on takeover news. Suddenly, I discovered you could lose $80,000 overnight." The New Market Wizards...pg.298

She was writing naked calls,which is something i would never do.But selling puts on stocks that you wouldn't mind owning at the strike price,if you were assigned,seems like a great and simple strategy.

riskarb · Mar 24, 2004

Quote from Maverick74:

Will someone please close this thread, it is now becoming completely gay and useless. Get this crap out of here. Trash talking is for chit chat. You guys can measure your cocks over there. LOL.

Homophobe!

For the life of me I cannot find the cock-measuring thread you're referring to Maverick, please post a link ;-)

riskarb

SumJurk · Mar 24, 2004

Quote from Cutten:

On the vast majority of stocks, short 3 puts cannot lose $50k under any circumstances whatsoever.

Perhaps your lengthy experience trading options will allow you to explain to us why the broker would demand more collateral than the maximum loss possible?

Finally, someone who post in a mature way.

Like I said, it was just after the crash of 87, and a lot of brokers got burned big time. I haven't traded options in about 15 years, so I'm sure margin requirements have changed, but I just find it hard to believe a broker would let some guy sell 125 puts with $50,000.

If you can, then yes, things have really changed. But, as you can see from my L. Rashke quote, you can get burned big time holding a large position. I believe she only had $30,000 at the time.

Of course, with electronic monitoring of accounts now, it may be perfectly okay with brokers to allow that large a position. Since, the computers will close everything auto, 24 hrs a day.

TempusFugit · Mar 24, 2004

Quote from riskarb:

Homophobe!

For the life of me I cannot find the cock-measuring thread you're referring to Maverick, please post a link ;-)

riskarb

How can you call a guy a homophobe when he was talking about NAKED PUTS??