3 ms·
Never mind, misread
by Bootvis 5y ago
Never mind, misread
- minitoar 5y agoShort option positions which gp is referring to aren’t really...optional. You sold the option to someone else.
- Kranar 5y agoSuppose you sell 1 put for 1 dollar with a strike of 100 dollars. The worst case scenario is that the asset decreases in price to be worth 0 dollars. The buyer of the put then exercises their option to sell the asset to you for 100 dollars, hence in total you lost 99 dollars. As a general matter, the most you can lose when selling a put is the strike price - premium.
- kortilla 5y agoYou’re confusing selling (writing) options, which come with being on the receiving end of the exercise as an obligation.