The Put Seller's Journal

[earth_imperator]

Nevermind, I see what you meant now about the stocks bit. But the put options not having unlimited loss? I do not get that.

You can check it best with such a tool: https://optioncreator.com/
At bottom of the page set Min=0 and Max=2x InitialSpot

 

[Overnight]

You can check it best with such a tool: https://optioncreator.com/

I wouldn't know how to use that tool. But effectively what you are saying is that there is unlimited loss on calls, but not puts. That does not make sense in my world of symmetry.

 

[Overnight]

I wouldn't know how to use that tool. But effectively what you are saying is that there is unlimited loss on calls, but not puts. That does not make sense in my world of symmetry.

@BlueWaterSailor Does that make sense? No unlimited loss on puts, based on that latest table earth provided?

 

[earth_imperator]

I wouldn't know how to use that tool. But effectively what you are saying is that there is unlimited loss on calls, but not puts. That does not make sense in my world of symmetry.

Believe me it's correct. I just double-checked and verified again
It's because of this: the x-axis (ie. the spot) is open-ended (meaning unlimited) to the right, but to the left it is limited to 0, ie. no negative stock-prices possible... and this causes the non-symmetry you mean.

 

[Overnight]

Believe me it's correct. I just double-checked and verified again

Pardon me while I wait for my friend who knows more about options than I, who can explain it to me in a lay-man's way.

 

[vanzandt]

I wouldn't know how to use that tool. But effectively what you are saying is that there is unlimited loss on calls, but not puts. That does not make sense in my world of symmetry.

Of course it makes sense!!!

If you sell a call, the underlying can go to $1M in theory.
If you sell a put, the underlying can only go to zero.

It's like shorting a stock. The f'r can go to the moon, but the most you can make is the current price going to zero.

 

[Overnight]

Of course it makes sense!!!

If you sell a call, the underlying can go to $1M in theory.
If you sell a put, the underlying can only go to zero.

It's like shorting a stock. The f'r can go to the moon, but the most you can make is the current price going to zero.

But what if you buy a put, and the stock goes to 1M, and the shares are put to you?

 

[vanzandt]

But what if you buy a put, and the stock goes to 1M, and the shares are put to you?

Dude.... if you BUY a put... the most you can lose is the price you paid.
You have bought an option that allows you to sell it to the seller for X$ in price.
Geeezuz christ @Overnight.... you need to get with the program bro. Read a friggin book, or watch a video.

 

[Overnight]

Dude.... if you BUY a put... the most you can lose is the price you paid.
You have bought an option that allows you to sell it to the seller for X$ in price.
Geeezuz christ @Overnight.... you need to get with the program bro. Read a friggin book, or watch a video.

God damnit, I always confuse the two. It's the buyer that gets the option to exercise, not the seller. I hate options! rofflecopter. Nevermind.

 

[vanzandt]

God damnit, I always confuse the two. It's the buyer that gets the option to exercise, not the seller. I hate options! rofflecopter. Nevermind.

and that's exactly why selling a call is no different than shorting a stock.
The stock goes to $1M.... and you're f'd.
Obviously the broker's risk management software would kick in before that happens... but in general... the loss is unlimited.
Sell a put on a $50 stock, the most you can lose is $50.