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Them too. Both involve "selling something you don't own" (the underlying security), a point disputed in the post I was replying to.
by coolgeek 16y ago
Them too. Both involve "selling something you don't own" (the underlying security), a point disputed in the post I was replying to.
- eru 16y agoI don't see how writing naked puts involves selling. They involve buying, only.
- Snurre 16y agoAll buying involve the counterpart selling. How can you buy something that isn't sold?
- eru 16y agoOh, but in naked puts the seller of the underlying assets (i.e. the buyer of the put) calls the shots. If they don't want to sell, they don't have to sell. And the writer of the put only ever has to put up at most the strike price of the put. So no unlimited risks there.