shorting options question

if you don't mind, can you please explain what happens on the screen?


so say I click the transmit button when shorting an option...

it would say for example "-1" (in the position column in red) and my net balance will still be the same.

so say the option is going my way and my net balance is increasing...are you saying, at anytime this -1 will turn into 0?

and if I don't have the stock to back it up, it will not only turn 0, but stocks will magically appear in my portfolio (would the stocks be in a short direction)?




Quote from RichardRimes:

opposite...when a stock is "put" to you..... literally cash disappears from the screen and the stock magically appears....

A great way to learn is to start with a paper account, TOS offers a virtual trading platform with $100K of play money, however you have to have a regular account with them. OX offer's (or at least did) a play money account and you don't have to fund the real one. This way you can actually learn first hand what happens to your stocks/options.
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If you were short put and it was assigned to you the long stock appears in your account. If you were short call then you are short stock after assignment.
 
Quote from z32000:

if you don't mind, can you please explain what happens on the screen?


so say I click the transmit button when shorting an option...

it would say for example "-1" (in the position column in red) and my net balance will still be the same.

so say the option is going my way and my net balance is increasing...are you saying, at anytime this -1 will turn into 0?

and if I don't have the stock to back it up, it will not only turn 0, but stocks will magically appear in my portfolio (would the stocks be in a short direction)?
More...

sorry can't help you with what happens on your screen as different brokers show your net liquidating value, cash balance etc somewhat differently...someone who uses IB might be better suited to helping you.

One comment is that you need to be more specific when you say short option...do you mean short put or short the call. You need to have an understanding of exactly WHAT is means to be short a put and short a call. Anytime you short a put or call there will be cash in your account but there will be a net theoretical liability...in other words an amount that you can lose at expiration which each brokerage must account for. Perhaps this is what has you confused. good luck
 
Quote from z32000:

actually I have used the paper trading account with IB. When I short options, I've never experienced a stock being "put" to me. Maybe there is no way to truely realistically simulate this...I'm not sure.
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even at expiration? I don't use my paper trading function very often so don't know if mine would either. You might ask IB if their paper account does simulate what happens at expiration....I would assume it did so if you were short a put that went in the money at expiration you should be assigned the stock even if its paper. IB should be able to answer that for you.
 
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