Message Font: Serif | Sans-Serif
No. of Recommendations: 0
You seem to be a little confused. You keep saying that you *bought* puts, but then you clarify that you used a Sell-to-Open order and received a premium:

"my thought was that I would just buy Basic Puts (Sell to Open)"

This is opening a position by *selling* puts, and is a bet that the stock will either go up or only dip slightly below your strike price at expiration. This is a great way to pick up shares at a discount (because of the premium received), but it has it's risks: 1. The stock could be significantly below your strike price at expiration, and you end up being forced to buy at a price much higher than market value, and 2. The stock is significantly above your strike price at expiration when you intended to pick up shares - sure, you get to keep your premium, but the stock ran away from you in the meantime, and you would have been much better off just buying shares.

The operation to close your position, if that's what you want to do, is called "Buy-to-Close" puts with the same strike price and expiration as the ones you wrote. This would not be forcing the people who bought the contracts you wrote to exercise early - that's not possible. You're just making a trade that cancels out your previous trade.
Print the post  


When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.