milsaw
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| Naked Put -> Buy -> Sell |
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I've been looking into the naked put technique and I have a quick question.
Let's say I do a naked put, then the stock drops to whatever price so I buy it. Can I turn around and sell it at like that same instance?
Thanks!
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Wed Aug 25, 2010 11:41 pm |
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coaster
Senior Advisor
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You won't know until the next day whether you've been assigned. If the underlying trades down through your strike price, I suppose you could buy a block of the underlying on the supposition you'll be assigned. Generally, you're better off either liquidating the short option position with an offsetting purchase, or spreading to minimize your risk. Most option traders don't exercise until the last day of trading, if that's what they want to do. The purpose of trading options is to trade the time value as well as the instrinsic value. Some options cannot be exercised, period, until the last trading day.
BTW, there is no such thing as a "naked put." Only calls are naked when they're not covered by ownership of the underlying.
~Tim~
Eye Candy : Why Whimsy
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Fri Aug 27, 2010 1:21 am |
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teena.robert
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| Re: Naked Put -> Buy -> Sell |
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quote:
Originally posted by milsaw
I've been looking into the naked put technique and I have a quick question.
Let's say I do a naked put, then the stock drops to whatever price so I buy it. Can I turn around and sell it at like that same instance?
Thanks!
It can be very risky.You must analyze the market situation before trading on naked put. If the position goes against your trade then you may see unlimited loss with your existing trade so you must keep in your mind this thing.
Forex Trading | Learning Forex
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Wed Jul 20, 2011 1:56 pm |
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coaster
Senior Advisor
Cash: $ 1357.80
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Joined: 11 Oct 2005
Location: Wisconsin
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| Re: Naked Put -> Buy -> Sell |
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quote:
Originally posted by teena.robert
If the position goes against your trade then you may see unlimited loss with your existing trade so you must keep in your mind this thing.
That is 100% totally absolutely without a doubt incontrovertibly incorrect and I wish people would not post rubbish on things they know nothing about just to flash their signatures.
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Thu Jul 21, 2011 1:29 am |
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