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re: Can you sell calls to establish a short position?
Posted on 7/12/16 at 8:24 am to Iowa Golfer
Posted on 7/12/16 at 8:24 am to Iowa Golfer
dude the trade is not down 50%, you're ridiculous at this point. I was traveling yesterday so I didn't get to sell them but if you sold SPY 214 calls for whatever .25 your trade is down yes if you choose to close it. Im talking about taking the 500 shares short and holding them, are you listening at all? I dont care about all your mumbo jumbo about buying $500 of puts or whatever. I dont want to buy puts bc those can go to $0. If I get short the SPY at 214 and hold it. Even if by some chance the SPY rips to 220 thats a 3% loss. At this point the upside on the SPY is under 5% and the downside is way way bigger.
Can you pay attention at all to what I said multiple times in this thread, I want to establish a market short position, this isnt a trade. I was asking if selling calls would let me establish said position $1 higher or if I shouldve waited for that 214 which was new ATH levels. All I asked was if selling calls at 214 while we were at 213 would allow me to get short much like selling puts at lower levels lets you get long
Nobody is down 50% if you get assigned a short and hold it through the september FOMC along with the continuing deterioration of economic data over the next 24 months.
Can you pay attention at all to what I said multiple times in this thread, I want to establish a market short position, this isnt a trade. I was asking if selling calls would let me establish said position $1 higher or if I shouldve waited for that 214 which was new ATH levels. All I asked was if selling calls at 214 while we were at 213 would allow me to get short much like selling puts at lower levels lets you get long
Nobody is down 50% if you get assigned a short and hold it through the september FOMC along with the continuing deterioration of economic data over the next 24 months.
1
Posted on 7/12/16 at 8:37 am to dabigfella
You're not going to get assigned shares in a short. You're going to have to buy shares, and then sell them to whomever exercies against you. You will left left holding nothing but your loss.
So in other words, right now as I type, you'd need to buys shares at 214.57, and have them sold at 213.5 if the call you sold was exercised. If not exercised, you could cover the option (buy to close) at over a 50% loss. Or wait.
Edit - And your naked trade is down 79% at open. What you collect .23-.79 for, now needs to be bought back for $1.73. Or if exercised, you'd need to buy 500 shares of SPY @ 214.86, and sell 500 shares at 213.50. You are left holding nothing. No short position.
Calls are named what they are becuase you can either call shares away (if you buy a call), or have shares called away from you (if you sell a call). And if you sell a call, shares are called away from you whether you own shares or not.
You're not going to hold anything. What I'm trying to graphically point out to you is that short SPY might, or might not be a bad trade, but the specific way you are describing going short is absolutely insane.
Otherwise, per your last sentence typed in your post above, you're going to have to explain to me how if this is exercised against you, and you sell the shares, how you will be able to hold anything until through September. Because there is nothing left to hold.
So in other words, right now as I type, you'd need to buys shares at 214.57, and have them sold at 213.5 if the call you sold was exercised. If not exercised, you could cover the option (buy to close) at over a 50% loss. Or wait.
Edit - And your naked trade is down 79% at open. What you collect .23-.79 for, now needs to be bought back for $1.73. Or if exercised, you'd need to buy 500 shares of SPY @ 214.86, and sell 500 shares at 213.50. You are left holding nothing. No short position.
Calls are named what they are becuase you can either call shares away (if you buy a call), or have shares called away from you (if you sell a call). And if you sell a call, shares are called away from you whether you own shares or not.
You're not going to hold anything. What I'm trying to graphically point out to you is that short SPY might, or might not be a bad trade, but the specific way you are describing going short is absolutely insane.
Otherwise, per your last sentence typed in your post above, you're going to have to explain to me how if this is exercised against you, and you sell the shares, how you will be able to hold anything until through September. Because there is nothing left to hold.
This post was edited on 7/12/16 at 8:43 am
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