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Author: cornellengr2008 Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 496  
Subject: Re: DDD Put Date: 1/29/2013 1:51 AM
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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.
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