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In that case you simply sell the call, instead of exercising (assigning) it. I switched to selling puts instead since then.
by cft 6y ago
In that case you simply sell the call, instead of exercising (assigning) it. I switched to selling puts instead since then.
- echelon 6y agoAre your puts covered? How do you mitigate the risk of the stock going up? I need to learn a lot more before doing this.
- cft 6y agoYes, puts are covered for now. There are several standardized levels of account access to buying/selling options. I think selling naked puts requires Level 5 while selling covered puts requires Level 3. I recommend practicing buying options first, and selling the options that you have bought, before selling covered or naked options.
- kortilla 6y agoWhen you sell a put, the risk is in the stock going down, not going up. So you need to have enough cash in the account to buy the stock at the strike price of the put (or be long longer dated or further out of the money puts).
- bowmessage 6y agoThe risk of the stock going up is that you make a lot of money :-)
- pb7 6y agoSelling puts is bullish. You are selling someone the option to sell you shares at a given price so if the stock goes up, you collect the premium (since no one will voluntarily sell you something at a lower price than the spot price). If the stock goes down, then you are buying shares at a price you presumably deemed sufficient to hold in the long term.