Selling Puts
- Thread starter pcgeek86
- Start date
So Scottrade lets you buy them but then you are stuck with and cannot sell it back to the marke???
I always say if you are going to trade options, then use an options broker. Scotttrade, TD Ameritrade, Schwab, E-trade, etc.... know nothing about options and always screw up the margin and what you can and cannot do.
I always say if you are going to trade options, then use an options broker. Scotttrade, TD Ameritrade, Schwab, E-trade, etc.... know nothing about options and always screw up the margin and what you can and cannot do.
I don't know anything about Scottrade, but this can't be right.
To make things clearer, think about the four transactions you can do with options:
BUY to open
SELL to open
BUY to close
SELL to close
I believe Scottrade is trying to prevent you from doing a "SELL to open", but they should not stop you from doing a "SELL to close". That would be insane. It would also increase your (and their) risk. Imagine you buy 10 GOOG 400 calls for $10 ea, and they go in the money. Initially, you were in for $10,000, but since you could not close the position, you're now in for $400,000 in stock.
To make things clearer, think about the four transactions you can do with options:
BUY to open
SELL to open
BUY to close
SELL to close
I believe Scottrade is trying to prevent you from doing a "SELL to open", but they should not stop you from doing a "SELL to close". That would be insane. It would also increase your (and their) risk. Imagine you buy 10 GOOG 400 calls for $10 ea, and they go in the money. Initially, you were in for $10,000, but since you could not close the position, you're now in for $400,000 in stock.
Are you sure you are reading the right contract? ? Maybe you are reading the retirement plan, which might not allow any put transactions.
Sounds like an IRA account limitation.
people conflate the terms SELL and WRITE
what they mean is that you can't WRITE them
you most certainly can sell them to close a long position
for example
i buy one Put ABC strike 10.5 expiry Mar for .15
i sell one Put ABC strike 10.5 expiry Mar for .25
that is fine
what thye are saying is they will not allow you to write these options. iow, you can buy premium (which has predefined risk) but you cannot sell it with that broker.
some brokers will not allow the writing of options at all
some will allow writing, only if its a covered position
others allow naked writing
what they mean is that you can't WRITE them
you most certainly can sell them to close a long position
for example
i buy one Put ABC strike 10.5 expiry Mar for .15
i sell one Put ABC strike 10.5 expiry Mar for .25
that is fine
what thye are saying is they will not allow you to write these options. iow, you can buy premium (which has predefined risk) but you cannot sell it with that broker.
some brokers will not allow the writing of options at all
some will allow writing, only if its a covered position
others allow naked writing
Hey guys, I know it sounds weird. For clarification's sake, this isn't an IRA account. I saw a couple of you saying it might be an IRA limitation, although I honestly don't think that's the case. To me, it appears to be a brokerage-wide limitation.
Attached is the PDF application for an options account. Take note of the text near the two checkboxes.
Here is a quote from the options trading page on a standard "individual" account.
Attached is the PDF application for an options account. Take note of the text near the two checkboxes.
Here is a quote from the options trading page on a standard "individual" account.
Hey, thanks for the clarification, and yes, they actually do present all four of those options in their trading tools, which is one reason I'm somewhat confused. However, the one point where I think you're just slightly off is that they are allowing a Sell To Open, but not a Buy To Close. It's possible that I'm thinking of this wrong, too, but wouldn't a Sell To Open be the equivalent of purchasing a put option?