Selling puts

Cutten · 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

Fascinating. Could you please explain how a stock gapping up $31 is going to cause any losses at all, let alone huge losses, to short PUT positions?

Hello_Dollars · 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.

Come on, Mav. Let us kids have our fun. So it's at the expense of the confused and dimwitted. I'm just doing what I attempt to do in trading -- fully exploit a clearly discernable edge. Is that so wrong?

riskarb · Mar 24, 2004

Quote from TempusFugit:

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

OMG...

riskarb

SumJurk · Mar 24, 2004

Quote from NasdaqTrader:

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.

It just so happens she was writing calls, it could of just as easily been puts with the same outcome on bad news.

Okay, so you're saying you will buy the stock if you need to. Well, under your example, you would need to buy $250,000 worth of stock.

If you were a broker, would you just take someones word that they'll pony up $250,000 if needed, and sell them 125 puts?

SumJurk · Mar 24, 2004

Quote from Cutten:

Fascinating. Could you please explain how a stock gapping up $31 is going to cause any losses at all, let alone huge losses, to short PUT positions?

I'm talking about selling naked in general, it could have been puts she was selling and got burned on bad news.

riskarb · Mar 24, 2004

Quote from SumJurk:

It just so happens she was writing calls, it could of just as easily been puts with the same outcome on bad news.

No, again... Stocks cannot trade negative values, hence put selling is inherently limited risk, call selling is unlimited risk. Selling cash-secured $10-strike puts into bad news is not the same as selling $10-strike calls into good news.

riskarb

SumJurk · Mar 24, 2004

Quote from riskarb:

No, again... Stocks cannot trade negative values, hence put selling is inherently limited risk, call selling is unlimited risk. Selling cash-secured $10-strike puts into bad news is not the same as selling $10-strike calls into good news.

riskarb

Since you refrained from insulting me, I'll give you one more go.

Okay, lets say you're short 125 puts and you've got $50,000.

Guess what, if that stock falls 4 dollars, you're out of here.

And if you don't think a stock can't fall from 10 to 6 in a hurry, guess again.

(boy, you kids have a lot to learn...lol)

riskarb · Mar 24, 2004

Quote from SumJurk:

Since you refrained from insulting me, I'll give you one more go.

Okay, lets say you're short 125 puts and you've got $50,000.

Guess what, if those options fall 4 dollars, you're out of here.

And if you don't think a put can fall from 10 to 6 in a hurry, guess again.

I'm not a proponent of selling single-sided positions, let alone a 125 lot on a stock with micro-risk. The point was that the risk to short calls and puts are not symmetrical.

BTW, you were the one who began with the profanity.

riskarb

riskarb · Mar 24, 2004

Quote from SumJurk:

And if you don't think a put can fall from 10 to 6 in a hurry, guess again.

(boy, you kids have a lot to learn...lol)

You're kidding, right? Let me into that put sale at 10, would love to bank the four handles from 10 to 6.

riskarb

SumJurk · Mar 24, 2004

Quote from riskarb:

I'm not a proponent of selling single-sided positions, let alone a 125 lot on a stock with micro-risk.

Then what the hell are we talking about, dude. This thread was about selling 125 puts with $50,000 in the account.

Take my advice, even if your broker is crazy enough to let you, don't do it.

As far as I'm concerned, this thread is closed. Cheers...