I am looking at the recommended synthetic long on IBM. I never sold a put before, so can someone tell me the process by which the broker credits the funds to your account. Does this settle immediately? Thanks.
When you sell any option, the proceeds are credited to your account on settlement date. If shares are "put" to you in due course, you do not pay for those shares unless and until you are exercised against. Alert #1: In order to be authorized, or "OK"ed to write options, an account owner must do the required "to-ing-and-fro-ing" to meet compliance rules and regulations and policies of the investment firm, and other authorities. Alert #2: Margin requirements must be met. A number of regulatory bodies have their rules and regulations and any firm is free to make their own on top. Make sure that you ask all of the pertinent SPECIFIC questions up front to your firm, and make sure that you understand clearly the answers.
Caution downside is limited, upside on IBM is unlimted. IBM has huge cash hoard and is actively buying back its stock. Macro risks exist but micro factors look very strong!
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