The Put Seller's Journal

vanzandt said:
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.
More...

Hmmm, maybe that is what I was thinking of...

You sell a put 100 strike when stock is at 50. The stock drops to 1. The buyer of the put exercises, and now you are stuck with a stock at 100 while it is at a buck. I guess the reason it cannot be unlimited is because you would never be in a scenario where you could sell a put at 1M strike when stock is at 50?
 
earth_imperator said:
A Hot Tip for Put Sellers:

How to reduce cash requirement (or margin requirement)
for example from $13,290 to just $400 (!) :

"Vertical Spreads: Lower Margin Requirement Hurdle to Target Capital Efficiency"
https://tickertape.tdameritrade.com/trading/vertical-options-spread-lower-margin-requirement-15634
"[...] And Remember the Kicker: Margin Reduction
The original margin requirement for selling a 134-strike cash-secured put is its strike price, less the credit received, times the multiplier, or:
($134 - $1.10) x 100 = $13,290.
The new margin requirement for the short 134/130 put vertical spread is the difference between the strikes x $100, or: (134-130) x $100 = $400.
In this example, turning the cash-secured put into a put vertical spread lowered your potential profit by $25, but reduced your margin requirement by a whopping $12,890 per contract. [...] "

Best useful & practical option trading tip I've ever seen.

Update: IMO the requirement is even just $315 instead of the said $400 (or the original $13,290), b/c the credit one receives will be counted for by the broker's system (here TDA), ie. the formula is then
Code: 
Requirement = ((ShortPut.Strike - LongPut.Strike) - (ShortPut.Premium - LongPut.Premium)) x 100
            = ((134             - 130)            - ($1.10            - $0.25))           x 100
            = $315

or alternatively (ie. the same result):

Requirement = ((ShortPut.Strike - ShortPut.Premium) - (LongPut.Strike - LongPut.Premium)) x 100
More...
A related posting referencing the quoted topic:
https://www.elitetrader.com/et/thre...put-spread-vehicle-also-for-cashaccts.368732/
 
Unfortunately outside the journal one may not post a link to an article in the journal. :(
The mod told me.

I today could not link an IMO important posting here by @vanzandt, rather I had to copy the content of the posting to the outside thread, stripping the link to the journal...

Never mind, if that's what's the rule, then that's what's the rule. :D
 
The Anatomy of ShortPut:

Anatomy_of_ShortPut.png
 
Mystery Maths:

Each item has its PLpct for its own DTE. Each item can have a different DTE.
The PLpct is then transformed to an annualized PLpct and this then used as a descending sort key in a multiset (ie. dupes are allowed).

When I change it from AnnualizedPLpct to MonthlyPLpct, then the resulting multiset differs!
Isn't that mysterious, and puzzling? :D Or can this mathematically not be true, and therefore there must be a bug in the program?
 
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