Jul 24, 2022
Number of words in this post: 89
4 outcomes of cash secured puts:
- Option expires OTM:
- Keep the premium.
- Collateral is freed to use.
- Option gets assigned ITM:
- Keep the premium.
- Collateral is used to purchase the underlying stock shares at strike price.
- You are okay or intented to own the underlying stock, hoping that it will rebounce above the strike price.
- Rollover:
- Buy-to-close on an option that’s already ITM, and sell an option that’s in the future, OTM.
- Collect more premium.
- Collateral changes.
- Buy-to-close:
- Not much value left in the options.
- Free up the collateral.