From what I understand of that. They will force you to Short (borrow stock) to cover the put if the option gets exercised. I can see why GGR considers all puts covered. What they are calling an "uncovered put" is really covered by your ability to borrow shares. I would think in that case it would be more beneficial to just straight up short the stock.
Your analysis is correct, except for the bolded part. on that subject, it's very unlikely someone is going to exercise put (against you) just because it's in the money, as long as there is solid time-value in it. More than likely you need to wait until 2021. As a seller, you of course can't force exercise.Need some advice.
Planning to buy some stock, and was thinking going the route via selling a put option.
If I sell a $200 2021 put which will pay me $4500.. Then worst case I wont get any stocks, but keep the $4500. Best case, I get 100 stocks for only $15.500? (pay $20.000 -4500 which I got paid for the put option)
The only downside is - it will be a covered put, and this will tie up $20.00 for two years.. and if SP soars I miss out on these 100 shares.
Best case - SP dip below $200 the next weeks and the PUT is exercised. And I get share now for $155 and am free to sell/rinse and repeat?
Am I correct? Completely new to selling options.. only experience with options is I have been burned a lot on calls the last years. :-D I am sick of loosing on time-cost, was thinking Id be on the other side of the trade for once.;-)
I sold $225 puts for this week for $300 in the morning, bought them back for $150 midday. I’ve been getting lucky with these. Hasn’t failed me yet, and when it does, I’m fine with adding shares
