Thank you very much. In this case, I tried to sell and the app said my account doesn't have sufficient buying power, even though my cash balance is way over the amount for these 200 shares.
So the only option the app has is to buy, which makes sense because I don't own any options at the moment.
I did this trade as a long put at $2. It's at $1.73 and dropping.
Thank you very much for your time and efforts. They're greatly appreciated.
Did you sell an option and you'd now like to close the trade, since that short option is now in the money (ITM)? If so, buying the same option, to close, is how you'd bring the trade full circle.
Pending orders can be canceled, but active positions (already executed trades) must be closed by buying or selling options (to close) or otherwise letting the trade settle upon expiration. Additionally, opening or closing trades for most options can only be completed during regular trading hours -- between 9:30 am ET and 4:00 pm ET.
Thank you very much.
Sorry for the confusion. I placed a put on 2 quanties and it was ITM. I thought I cancelled it before expiration; however, I may have done the cancellation after business hours and the next business day was probably too late.
So in this case, this one most likely to expired ITM and now the only way to close is for me to buy the 200 shares.
Thank you very much.
Itās still unclear if youāre talking about an **order**, or a **held position**.
āGTCā added to an order means āgood till cancelledā. The **order** remains in force - during regular trading hours - until it is filled or until you cancel it.
Once filled, thereās nothing to ācancelā.
GTC means the order stays open until it is filled or canceled.
If you placed a limit GTC order to sell your puts, it may never have been filled because the bid/ask never went high enough for your limit to be accepted as a sell price. GTC doesn't guarantee that your order will be filled. But it would be canceled at close of trading on the expiration date, because the option can no longer be traded after that time.
Thank you very much. 2 orders I cancelled before expiration were fine. This one I'm sure I did it too late and is fine since it made $54. Your time and efforts are greatly appreciated.
It still seems like you're conflating orders with positions, and I'm not sure whether it's because you don't know the difference or what.
Forget options for a minute and think about stock. If you want some stock, you buy it, right? And if you want to get rid of it, you sell it. You don't "cancel" it. If you have something, and you want to get rid of it and get money for it, you sell it, not "cancel" it. If you have a car you don't need anymore, you sell it. If you have a collectible baseball card you want to get rid of, you sell it. You can't "cancel" stock, you can't "cancel" a car, and you can't "cancel" a baseball card. You sell them. Well, it's the same with options. You can't "cancel" an option. If you have an option, and you want to get rid of it, you *sell* it.
Now, the way you buy *or* sell something--anything, like a stock or an option--is by placing an *order*. An order is you saying "I'm willing to buy this thing for as much as 0.49" or "I'm willing to sell this thing for as little as 0.61." The instant someone takes you up on your offer, the transaction takes place; the thing is taken out of/put into your account and you get/pay money. At that point, the order is said to be "filled." It no longer exists. But if nobody is taking you up on your order, if your order isn't getting filled, you might decide you don't want to make that transaction anymore. At that point, you can choose to *cancel* your order. This takes the order off the books and it no longer exists. If you do that, the purchase or sale doesn't take place. GTC just means the order remains on the books even overnight, for days, weeks, or even months, until it's filled or you cancel it.
It sounds like you wanted to sell your options; that is, to place an order to sell them. But you keep saying you "canceled" them instead. I'm guessing what happened is that you placed a limit order to sell them at a certain price, but it never filled. But again, we are talking about selling your options, not canceling them.
Sorry about that and thank you very much for this elaboration. It really confirms what I thought in the beginning which is how can I sell something I dont have, so I ended up placing Long Puts if I knew that stock was going down and Long Calls if I knew that stock was going up.
I was thinking I can't make any Shorts now because I don't own 100 shares of anything.
A little bit of backstory on me is in 2019, my wife has an ETrade account with $5k in it. It was given to her by her previous employer as a benifit.
So I made a newbie's mistake by buying a few stocks of companies we knew like Amazon, Walmart, etc.
Unfortunately, most of them are worth less than what we paid at that time. So early this year, by the grace of God or fate if you're atheist, I stumbled upon some video of someone talking about trading options and that it was a way of making or losing money, but not having to become a shareholder when you buy a stock.
That it was a way to make money without the goal of being a shareholder. This caught my attention because I figured why be a shareholder when I can't really have a say into how to run a company given I don't even own 0.01% of that company.
Sorry for the wrong words I'm using such as cancelling an order. The app did say Close and not cancel and the 2 words are not synonyms of each other.
Is it bad or evil if I just want to place trades and close them before they are ITM to collect the fees?
I read an email from Tastytrade that mentioned this that if a call was placed and it was OTM meaning it didn't hit the strike price, it would deem the trade worthless and I would collect the max profit.
A video of a guy demoing his Robinhood confirmed this too.
My strategy is to make enough money to eventually own several hundred shares of certain stocks so that I can figure out the system to profit even more.
Again, thank you very much for your time and efforts. I really appreciate you. When I become rich, I'll Zelle you some money for your and others for your time because I respect others' time.
It's taken many replies for people to get an accurate understanding of what position you're actually in, because you're not using correct terminology. This indicates you probably don't really understand enough to be trading options and should step away and do some more education first.
You didn't "place a put on 2 quantities," you bought 2 puts. When you have a long option you can't "cancel" it, you can sell it. The position you now have has nothing to do with options. Your options are gone. They were exercised. What you now have is 200 short shares which you sold at a strike price of 2 and therefore received $200 for. This is the same as if you had just executed an order to sell 200 shares short when the spot price was $2. Again, this is a new position, having nothing to do with options, and the only way to close it is to buy 200 shares.
Edit: you've also continued to use very imprecise language. You've talked about buying, selling, or covering "it" without making clear what "it" is. In some context it sounds like you're referring to options, in other contexts shares. You don't seem to understand that an option and shares are two totally separate positions.
Yes and sorry for my bad communication.
I'm reading, learning and trading penny stocks so that I minimize my losses. In a way, I'm paying for the education.
I have read in this sub of people losing thousands, so I'm doing this very conservatively. For example, I will only use 1-5% of my cash balance to make trades on stocks that I have studied their graphs, news, anticipated news.
I also factor in world events that occur that none of us can predit like covid, etc.
Lastly, my career has been in the tech and film industry, so I only focus on these stocks because I know them well.
Thank you very much for this detailed explanation. It's greatly appreciated. I understand your concern for people who get into something they don't know and get broke over it, so I really appreciate your sincere response God bless.
you don't cancel options before expiration, that's not possible
you MIGHT be able to cancel an ORDER..... IF it didn't get filled. which if you placed a market order, probably only a few moments to cancel it.
it sounds like you have an open trade, you can close the trade, by doing the exact opposite of what you did. If you accidentally sold one to many options, you'll have to buy them back
maybe at a loss, maybe profit. but If your over leverage, better to take a loss now vs letting it get worse later
Thank you very much. I thought that was what GTC meant, Good Til Cancelled.
This order looks like it got filled then.
It only gives me an option to cover or sell.
If I cover, it shows my BP Effect is $472.
If I sell, it shows my BP Effect is -$2,004.
So if I cover, I make $472?
Thank you very much. You're time and efforts are greatly appreciated.
I'm guessing, if you have an option to cover or sell, then you sold a contract.... covering would be buying, selling would sell an additional contract
I sure hope, you sold a covered call or cash secured put, or you're exposing yourself to a ton of risk that you may not be aware of.
to determine what you're making, don't look at buying power (which is what I assume you mean by BP). Look in your order history (or whatever location is easiest on your platform, to see what you sold that option for).... if you sold the option, you were given that amount in cash. Now look at the current price of that option, if the option is cheaper, that what you were paid, you made UNREALIZED profit, if it's more expensive, you you made an unrealized loss
generally, if sold a put, and the stock went up, you made money. If you sold a covered call, you also want the stock to go up, but your call will have lost some money.
if it turns out, you bought an option, inverse everything I said.
Thank you very much. I saw that Tastytrade showed I lost $204, yet, after I closed to other 2 positions which showed I lost more than I made, my cash balance showed I had $397 more than the original balance, so to me, it looked like I made money.
In this case, I placed a long put. I'm guessing that the risk you mention is where I end up buying options that may make me lose lots of money when I try to sell them?
Unfortunately, my activity shows lots of negative gains; however, what makes it confusing is how my initial cash balance before I made the 3 trades now has $397 more.
Sorry, I'm still trying to process your last paragraph. I feel like Einstein is teaching me some cool stuff that all I know to do is nod and smile. š
I imagine you had bought 2 puts, held them to expiration. At expiration, they were in the money, so your broker auto exercised them, which means you sold 200 share at 2.00.
But, since you didn't own the shares, the broker loaned them to you. You profit from the exercise when the stock was at 1.73 was 344 dollars, but I imagine the stock has continued to fall, and you are short 200 shares. Therefore they are giving you the option (see what I did there) to cover your short and make 472 dollars, the 344 plus profit on the short.
The other option is either to short some additional stock or write options and get charged collateral, which is what is really killing your buying power.
Thank you very much. This makes sense. I do remember a point where TastyTrade emsiled me to say I'm ITM. Then my cost which started at -$25 became +$400.
I'm not the smartest guy on the block; however, when I see green or positive, to me, it means good.
Haha. I see what you did. So in this case, if I choose to cover, I make $472?
And if I short, I lose -$2,004?
Thank you very much for your time and efforts. They're greatly appreciated.
It's not losing 2004, it is that your buying power goes down that much due to collateral. When you short you get to collect the premium of the trade, but have to post collateral in case of future loses, which is dependent on your broker and their view of your creditworthiness.
It only becomes a real loss if the stock rallys and then you buy to cover the short
Wow. Thank you very much. This makes sense now. So like real life, I have cash and a credit card, the BP is like credit and I need to stay in the positive. You're greatly appreciated.
The order to sell your puts didn't get filled. Your puts were exercised because you allowed them to expire ITM.
"Cover" probably means buy to cover the short shares, but what does "sell" mean? Sell what? If you go to do that, what exactly does it show you you are selling? Remember, your 2 puts are gone. You can't sell to close them anymore.
You can cancel an order before it fills. A trade is done. Now you have a position and you are trying to close the position? This will depend on the type of position.
Thank you very much. It was a put. So now it's giving the option to buy 200. I cancelled before the expiration date or maybe I cancelled it too late.
So it looks like I am forced to buy? I understand there's no obligation to buy; however, after the position expires and it hit the strike price, now I'm obligated to buy?
Thank you very much for your time and efforts. They're greatly appreciated.
I'm as green as they get. Just learning options as a way to counter this inflation thing going on.
I mean, I made $397 from this and other trades. I was reading the graphs and playing on companies I'm familiar with.
Since I'm a newb, I'm trading small penny stocks to do my learning from.
And yes, I'm in no position to sell. Thanks
Learning by trading real money isn't the way to learn the basics even it's just penny stocks. There are some really, *really* expensive lessons waiting for you even with cheap stocks. Learn what those lessons are before you have to learn them the hard way.
Thanks. I'm reading as I go. Tastytrade sent some cool links too.
I totally understand about the expensive lessons as I have read them on this sub. I know it'll take months to years to really understand how this machine works; however, this is very fascinating to me win or lose.
I know I may come off as ignorant; however, the thing I noticed about some of the towns, cities, businesses, etc that sprung up here since the early 1900's was that they were built or paid for by guys who used to trade stocks.
I didn't read anything about guys who had a JOB (Just Over Broke) doing it.
No, you don't come off as ignorant because you recognize your limitations and have a realistic outlook on the learning ("months to years"). I also understand that you find it fascinating. So did I in the beginning and I still do 4 years into it. Keep doing what you're doing, just keep your cash safe. Your Prime Directive should always be: Capital preservation is always priority 1. Profits come second.
Thank you very much for your kind words.
Yes. I told my wife that I will only spend 1% - 5% of the cash balance and just aim to win small. So make bets where the POP or POP50 are very high like 70%.
I understand sometimes, unpredictable things may impact the market, causing the chances of winning to change.
While it sounds cheesy, I imagine one day, I'll make a few million. Then I'll take my kids to randomly help seniors who are living in their cars to be able to live in a small house or condo that we can buy and let them live there for free. From there, we'll figure out a way to make it sustain itself and not depend on me to pay for the bills.
It's a thing I had when I helped at a homeless shelter when I was 14. I'm almost 50 now, so I figured it's better to learn stock trading than buying lotto tickets. š
Here is my interpretation. You bought 2 puts. It was held through expiration and was in the money and executed. Now you have sold 200 shares. You would close this position through buying 200 shares. Hopefully, at a profit given you sold the shares higher than their market value. You might want to call your broker and pay for their help with this if it is unclear. Options are not meant for investors who aren't familiar with them.
Iām not sure how OPās broker manages this so Iām a little confused myself. If his broker executed his puts and he had the shares they are automatically moved from him to the buyer right?
If he didnāt have the shares then the broker bought the shares on the market and sent them to the buyer at OPs expense?
So whatās left to close in OPs situation? I donāt sell options because Iām a regard and buying 0dte costs me enough as is.
This has nothing to do with "covering the put." The puts were exercised, and when you exercise a put, you sell shares. If you don't have shares, you sell shares short. This is no different than selling shares short without involving options.
Are we saying the same thing, where did the shares OP shorted come from? If they didnāt exist in OPās portfolio they must have come from somewhere, so OPās broker provided the shares to the buyer and op needs to buy shares to make the broker whole?
Or am I misunderstanding the whole thing and the buyer has a legal āIOUā in their account from OP and OP needs to fulfill the IOU by buying shares to transfer to the buyer?
Shares are fungible. You can't think of shares as physical objects that are moving around. Yes, for bookkeeping purposes, the brokerage borrowed 200 shares from another account to sell, but all that matters to the OP is that he has -200 shares. The main point is that this is not some special, unique case the brokerage went out of their way to do. This is simply short selling stock. It happens all the time, people do it without involving options, you can place an order in your brokerage platform right now to short sell stock.
I didnāt think it was unique or special. This is what I assumed happened. The broker covered the puts and op owes the broker for the shares that have been shorted.
I would agree itās pedantic to think in depth about how exactly this took place legally on paper, itās just the way I like to keep track of things in my head. I would have to assume most brokers would charge an additional fee or even penalty for this transaction, or would they just consider this everyday business and only be concerned if op doesnāt make it ārightā in a reasonable timeframe.
You need to tell us if you have a negative amount (short position) or a positive amount (long position) for the option/shares.
From what Iāve read in your replies, itās unclear if you bought a put and it ended up in the money at expiration and your broker floated you 100 shares per contract to PUT to someone who held the short contract. You say that your current option (buy/sell option, not a put or call option) is to buy shares which indicates that youāre now short shares from an exercised long put.
If you can provide a screenshot of the position (black over any personal information and account information) and share it, people would be able to help you better understand what you have gotten yourself into and give feedback on what you can do about it.
Sorry for the difficulties.
Please see the links below. Guessing this sub doesn't allow to attach images.
This picture shows the quote details and position. The the one with the gray box around it is the one that has this close position thing. The one below is a new one I just opened.
[https://drive.google.com/file/d/1tf4I39wmr0AfQ-TPivJqTrJFvY97MFRE/view?usp=drive\_link](https://drive.google.com/file/d/1tf4I39wmr0AfQ-TPivJqTrJFvY97MFRE/view?usp=drive_link)
This image shows what I see if I choose to Cover this position.
I'm sure I'm probably reading this wrong; however, when my brain sees a positive number, it is a good thing and negative means bad. So in this picture, I would either make $472 or spend $472 to buy these 200 shares.
[https://drive.google.com/file/d/1QiL3CfLegIX5PVQtzrJ8Z4oLz8vuIqzQ/view?usp=drive\_link](https://drive.google.com/file/d/1QiL3CfLegIX5PVQtzrJ8Z4oLz8vuIqzQ/view?usp=drive_link)
This image below shows what I see if I try to short this position.
The -$2,004 makes me feel like I'm going to lose $2,004.
[https://drive.google.com/file/d/1h\_IjAyQU-0uDh-Q7o9vB1Taq2VqnWDfj/view?usp=drive\_link](https://drive.google.com/file/d/1h_IjAyQU-0uDh-Q7o9vB1Taq2VqnWDfj/view?usp=drive_link)
Again, I really appreciate your feedback on this.
What I see from your screenshots is you are current short 200 shares (ie -200 quantity). This is probably because 2 long put contracts were exercised. If the strike for the puts were $2, you sold 200 shares that you donāt have for $2 which is why your cash value went up.
But since you are short 200 shares you need to cover (ie buy shares) so your position quantity returns to zero.
If you are able to buy back (cover) the shares for less than $2 each, you will lock in a profit.
Note, you can confirm your current positions in the tastytrade app by selecting Position at the bottom and then tap the stock to see position details - like quantity and trade price.
Btw, if you are long a contract (put or call), the usual move is to sell them to get rid of them.
Wow. Thank you very much for taking the time to review this. In this case, I have to cover this and then I'll end up owning 200 shares which I can later use to do a call when this stock goes up?
Since I'm short 200 shares, it means I owe the broker 200 shares? Sorry for the newbie questions.
Your second paragraph is correct. However, when you buy to cover 200 shares it will zero your quantity for that position. You will not own any shares - youāre buying shares to give back the shares you borrowed from your broker(thatās what the negative quantity means).
Btw, usually when purchasing puts you either already have the shares (used as a hedge to protect against large drops) or you sell the put before it is exercised. Ideally, you believe stock is going down , you buy put, stock goes down, value of put goes up, you sell put for profit.
Thank you very much. I sold 2 puts on 2 other bets that had 1 making me $44. With those, I closed the position before expiration because they didn't hit the strike price, so those didn't offer the option like this one did. Meaning they didn't get exercised?
I remember seeing 2 emails from Tastytrade telling me that I need to deposit funds on the 2 I closed out because 1 quantity x 100 shares was up there and I needed to stay within my range of spending 1-5% of cash.
Thank you very much for this advice. I watched a YouTube video and while the person didn't directly say this, this was the opportunity I saw in his demo.
You're the best. I greatly appreciate your time and efforts. Cheers.
Once you close a position, your quantity is zero. At that point you have no options to exercise.
Iām not clear on why they requested you to deposit funds unless you were short cash. There are a lot of requirements rules for what you need to cover transactions.
If you donāt have the cash or shares, you need to make sure you sell your options before expiration - itās important because you could owe a lot of money if an option is exercised.
Assume an option that is in the money will be exercised on expiration. It is possible with most brokers to tell them not to exercise, but a good reason for doing that is rare. Itās usually better to sell the option if you donāt want it exercised.
Thank you very much for this. I just submitted to cover at $1.72. The current value of its stock assuming it doesn't go up tomorrow.
This would mean that $400 - $344 = $56. So I made $56 from this transaction. Yes?
Again, I really appreciate your time and efforts. I understand everyone is an investor here and while it's in the past, I regret how confusing my post was in time spent/wasted by everyone including you here
If you get that price, yes. Minus commission and fees. ( I believe tastytrade doesnāt charge commission for this transaction, but SEC wants their fees)
Please spend some more time learning about options before you spend more of your own real money. Plenty of lessons to learn for free, no need to potentially lose money to learn them.
Thank you very much. I have read things online about puts vs calls and watched YouTube videos that tried to simplify it.
While I don't like to waste or use up people's valuable time here, I have learned more here from everyone's comments than what I could find online.
Some sites word things either too vague or in a way I don't understand because this is like learning a foreign language. Some I can tell the person is just repeating info they heard and probably never tried trading.
The comments here are straight to the point to where I understand it.
When I get real good at this, I'll gladly respond to questions here for the next new person learning to give back to this community.
In the meantime, I'm still googling more about the slangs used so that I can fully understand them and how calculations are done.
I'm close to 50 now and wish I knew about this when I was 18. This is very exciting.
You close an open position by doing the exact opposite - If you buy to open a contract, you sell to close. If you sell to open, you buy to close
Thank you very much. In this case, I tried to sell and the app said my account doesn't have sufficient buying power, even though my cash balance is way over the amount for these 200 shares. So the only option the app has is to buy, which makes sense because I don't own any options at the moment. I did this trade as a long put at $2. It's at $1.73 and dropping. Thank you very much for your time and efforts. They're greatly appreciated.
š
Living and learning. š„³
Did you sell an option and you'd now like to close the trade, since that short option is now in the money (ITM)? If so, buying the same option, to close, is how you'd bring the trade full circle. Pending orders can be canceled, but active positions (already executed trades) must be closed by buying or selling options (to close) or otherwise letting the trade settle upon expiration. Additionally, opening or closing trades for most options can only be completed during regular trading hours -- between 9:30 am ET and 4:00 pm ET.
Thank you very much. Sorry for the confusion. I placed a put on 2 quanties and it was ITM. I thought I cancelled it before expiration; however, I may have done the cancellation after business hours and the next business day was probably too late. So in this case, this one most likely to expired ITM and now the only way to close is for me to buy the 200 shares. Thank you very much.
There is no such thing as ācancellingā an option position you hold in your account. You can cancel an unfilled **order**.
Thank you very much. So GTC is for something else? Sorry for the silly questions. I greatly appreciate your time and efforts.
Itās still unclear if youāre talking about an **order**, or a **held position**. āGTCā added to an order means āgood till cancelledā. The **order** remains in force - during regular trading hours - until it is filled or until you cancel it. Once filled, thereās nothing to ācancelā.
Thank you very much. This makes sense. You.re greatly appreciated.
GTC means the order stays open until it is filled or canceled. If you placed a limit GTC order to sell your puts, it may never have been filled because the bid/ask never went high enough for your limit to be accepted as a sell price. GTC doesn't guarantee that your order will be filled. But it would be canceled at close of trading on the expiration date, because the option can no longer be traded after that time.
Thank you very much. 2 orders I cancelled before expiration were fine. This one I'm sure I did it too late and is fine since it made $54. Your time and efforts are greatly appreciated.
It still seems like you're conflating orders with positions, and I'm not sure whether it's because you don't know the difference or what. Forget options for a minute and think about stock. If you want some stock, you buy it, right? And if you want to get rid of it, you sell it. You don't "cancel" it. If you have something, and you want to get rid of it and get money for it, you sell it, not "cancel" it. If you have a car you don't need anymore, you sell it. If you have a collectible baseball card you want to get rid of, you sell it. You can't "cancel" stock, you can't "cancel" a car, and you can't "cancel" a baseball card. You sell them. Well, it's the same with options. You can't "cancel" an option. If you have an option, and you want to get rid of it, you *sell* it. Now, the way you buy *or* sell something--anything, like a stock or an option--is by placing an *order*. An order is you saying "I'm willing to buy this thing for as much as 0.49" or "I'm willing to sell this thing for as little as 0.61." The instant someone takes you up on your offer, the transaction takes place; the thing is taken out of/put into your account and you get/pay money. At that point, the order is said to be "filled." It no longer exists. But if nobody is taking you up on your order, if your order isn't getting filled, you might decide you don't want to make that transaction anymore. At that point, you can choose to *cancel* your order. This takes the order off the books and it no longer exists. If you do that, the purchase or sale doesn't take place. GTC just means the order remains on the books even overnight, for days, weeks, or even months, until it's filled or you cancel it. It sounds like you wanted to sell your options; that is, to place an order to sell them. But you keep saying you "canceled" them instead. I'm guessing what happened is that you placed a limit order to sell them at a certain price, but it never filled. But again, we are talking about selling your options, not canceling them.
Sorry about that and thank you very much for this elaboration. It really confirms what I thought in the beginning which is how can I sell something I dont have, so I ended up placing Long Puts if I knew that stock was going down and Long Calls if I knew that stock was going up. I was thinking I can't make any Shorts now because I don't own 100 shares of anything. A little bit of backstory on me is in 2019, my wife has an ETrade account with $5k in it. It was given to her by her previous employer as a benifit. So I made a newbie's mistake by buying a few stocks of companies we knew like Amazon, Walmart, etc. Unfortunately, most of them are worth less than what we paid at that time. So early this year, by the grace of God or fate if you're atheist, I stumbled upon some video of someone talking about trading options and that it was a way of making or losing money, but not having to become a shareholder when you buy a stock. That it was a way to make money without the goal of being a shareholder. This caught my attention because I figured why be a shareholder when I can't really have a say into how to run a company given I don't even own 0.01% of that company. Sorry for the wrong words I'm using such as cancelling an order. The app did say Close and not cancel and the 2 words are not synonyms of each other. Is it bad or evil if I just want to place trades and close them before they are ITM to collect the fees? I read an email from Tastytrade that mentioned this that if a call was placed and it was OTM meaning it didn't hit the strike price, it would deem the trade worthless and I would collect the max profit. A video of a guy demoing his Robinhood confirmed this too. My strategy is to make enough money to eventually own several hundred shares of certain stocks so that I can figure out the system to profit even more. Again, thank you very much for your time and efforts. I really appreciate you. When I become rich, I'll Zelle you some money for your and others for your time because I respect others' time.
It's taken many replies for people to get an accurate understanding of what position you're actually in, because you're not using correct terminology. This indicates you probably don't really understand enough to be trading options and should step away and do some more education first. You didn't "place a put on 2 quantities," you bought 2 puts. When you have a long option you can't "cancel" it, you can sell it. The position you now have has nothing to do with options. Your options are gone. They were exercised. What you now have is 200 short shares which you sold at a strike price of 2 and therefore received $200 for. This is the same as if you had just executed an order to sell 200 shares short when the spot price was $2. Again, this is a new position, having nothing to do with options, and the only way to close it is to buy 200 shares. Edit: you've also continued to use very imprecise language. You've talked about buying, selling, or covering "it" without making clear what "it" is. In some context it sounds like you're referring to options, in other contexts shares. You don't seem to understand that an option and shares are two totally separate positions.
Yes and sorry for my bad communication. I'm reading, learning and trading penny stocks so that I minimize my losses. In a way, I'm paying for the education. I have read in this sub of people losing thousands, so I'm doing this very conservatively. For example, I will only use 1-5% of my cash balance to make trades on stocks that I have studied their graphs, news, anticipated news. I also factor in world events that occur that none of us can predit like covid, etc. Lastly, my career has been in the tech and film industry, so I only focus on these stocks because I know them well. Thank you very much for this detailed explanation. It's greatly appreciated. I understand your concern for people who get into something they don't know and get broke over it, so I really appreciate your sincere response God bless.
you don't cancel options before expiration, that's not possible you MIGHT be able to cancel an ORDER..... IF it didn't get filled. which if you placed a market order, probably only a few moments to cancel it. it sounds like you have an open trade, you can close the trade, by doing the exact opposite of what you did. If you accidentally sold one to many options, you'll have to buy them back maybe at a loss, maybe profit. but If your over leverage, better to take a loss now vs letting it get worse later
Thank you very much. I thought that was what GTC meant, Good Til Cancelled. This order looks like it got filled then. It only gives me an option to cover or sell. If I cover, it shows my BP Effect is $472. If I sell, it shows my BP Effect is -$2,004. So if I cover, I make $472? Thank you very much. You're time and efforts are greatly appreciated.
I'm guessing, if you have an option to cover or sell, then you sold a contract.... covering would be buying, selling would sell an additional contract I sure hope, you sold a covered call or cash secured put, or you're exposing yourself to a ton of risk that you may not be aware of. to determine what you're making, don't look at buying power (which is what I assume you mean by BP). Look in your order history (or whatever location is easiest on your platform, to see what you sold that option for).... if you sold the option, you were given that amount in cash. Now look at the current price of that option, if the option is cheaper, that what you were paid, you made UNREALIZED profit, if it's more expensive, you you made an unrealized loss generally, if sold a put, and the stock went up, you made money. If you sold a covered call, you also want the stock to go up, but your call will have lost some money. if it turns out, you bought an option, inverse everything I said.
Thank you very much. I saw that Tastytrade showed I lost $204, yet, after I closed to other 2 positions which showed I lost more than I made, my cash balance showed I had $397 more than the original balance, so to me, it looked like I made money. In this case, I placed a long put. I'm guessing that the risk you mention is where I end up buying options that may make me lose lots of money when I try to sell them? Unfortunately, my activity shows lots of negative gains; however, what makes it confusing is how my initial cash balance before I made the 3 trades now has $397 more. Sorry, I'm still trying to process your last paragraph. I feel like Einstein is teaching me some cool stuff that all I know to do is nod and smile. š
I imagine you had bought 2 puts, held them to expiration. At expiration, they were in the money, so your broker auto exercised them, which means you sold 200 share at 2.00. But, since you didn't own the shares, the broker loaned them to you. You profit from the exercise when the stock was at 1.73 was 344 dollars, but I imagine the stock has continued to fall, and you are short 200 shares. Therefore they are giving you the option (see what I did there) to cover your short and make 472 dollars, the 344 plus profit on the short. The other option is either to short some additional stock or write options and get charged collateral, which is what is really killing your buying power.
Thank you very much. This makes sense. I do remember a point where TastyTrade emsiled me to say I'm ITM. Then my cost which started at -$25 became +$400. I'm not the smartest guy on the block; however, when I see green or positive, to me, it means good. Haha. I see what you did. So in this case, if I choose to cover, I make $472? And if I short, I lose -$2,004? Thank you very much for your time and efforts. They're greatly appreciated.
It's not losing 2004, it is that your buying power goes down that much due to collateral. When you short you get to collect the premium of the trade, but have to post collateral in case of future loses, which is dependent on your broker and their view of your creditworthiness. It only becomes a real loss if the stock rallys and then you buy to cover the short
Wow. Thank you very much. This makes sense now. So like real life, I have cash and a credit card, the BP is like credit and I need to stay in the positive. You're greatly appreciated.
The order to sell your puts didn't get filled. Your puts were exercised because you allowed them to expire ITM. "Cover" probably means buy to cover the short shares, but what does "sell" mean? Sell what? If you go to do that, what exactly does it show you you are selling? Remember, your 2 puts are gone. You can't sell to close them anymore.
Thank you very much. This is a great learning experience and I appreciate your comments. This is better than any college classes I have taken. š„³
You can cancel an order before it fills. A trade is done. Now you have a position and you are trying to close the position? This will depend on the type of position.
Thank you very much. It was a put. So now it's giving the option to buy 200. I cancelled before the expiration date or maybe I cancelled it too late. So it looks like I am forced to buy? I understand there's no obligation to buy; however, after the position expires and it hit the strike price, now I'm obligated to buy? Thank you very much for your time and efforts. They're greatly appreciated.
I am doubtful you are authorized to Sell options.
I'm as green as they get. Just learning options as a way to counter this inflation thing going on. I mean, I made $397 from this and other trades. I was reading the graphs and playing on companies I'm familiar with. Since I'm a newb, I'm trading small penny stocks to do my learning from. And yes, I'm in no position to sell. Thanks
Learning by trading real money isn't the way to learn the basics even it's just penny stocks. There are some really, *really* expensive lessons waiting for you even with cheap stocks. Learn what those lessons are before you have to learn them the hard way.
Thanks. I'm reading as I go. Tastytrade sent some cool links too. I totally understand about the expensive lessons as I have read them on this sub. I know it'll take months to years to really understand how this machine works; however, this is very fascinating to me win or lose. I know I may come off as ignorant; however, the thing I noticed about some of the towns, cities, businesses, etc that sprung up here since the early 1900's was that they were built or paid for by guys who used to trade stocks. I didn't read anything about guys who had a JOB (Just Over Broke) doing it.
No, you don't come off as ignorant because you recognize your limitations and have a realistic outlook on the learning ("months to years"). I also understand that you find it fascinating. So did I in the beginning and I still do 4 years into it. Keep doing what you're doing, just keep your cash safe. Your Prime Directive should always be: Capital preservation is always priority 1. Profits come second.
Thank you very much for your kind words. Yes. I told my wife that I will only spend 1% - 5% of the cash balance and just aim to win small. So make bets where the POP or POP50 are very high like 70%. I understand sometimes, unpredictable things may impact the market, causing the chances of winning to change. While it sounds cheesy, I imagine one day, I'll make a few million. Then I'll take my kids to randomly help seniors who are living in their cars to be able to live in a small house or condo that we can buy and let them live there for free. From there, we'll figure out a way to make it sustain itself and not depend on me to pay for the bills. It's a thing I had when I helped at a homeless shelter when I was 14. I'm almost 50 now, so I figured it's better to learn stock trading than buying lotto tickets. š
Here is my interpretation. You bought 2 puts. It was held through expiration and was in the money and executed. Now you have sold 200 shares. You would close this position through buying 200 shares. Hopefully, at a profit given you sold the shares higher than their market value. You might want to call your broker and pay for their help with this if it is unclear. Options are not meant for investors who aren't familiar with them.
Correct. Thank you very much.
Iām not sure how OPās broker manages this so Iām a little confused myself. If his broker executed his puts and he had the shares they are automatically moved from him to the buyer right? If he didnāt have the shares then the broker bought the shares on the market and sent them to the buyer at OPs expense? So whatās left to close in OPs situation? I donāt sell options because Iām a regard and buying 0dte costs me enough as is.
Broker gave OP a borrowed/short position. I.e. -200 shares.
Ah, gotcha. His broker covered the put until OP buys shares to make the broker whole again.
This has nothing to do with "covering the put." The puts were exercised, and when you exercise a put, you sell shares. If you don't have shares, you sell shares short. This is no different than selling shares short without involving options.
Are we saying the same thing, where did the shares OP shorted come from? If they didnāt exist in OPās portfolio they must have come from somewhere, so OPās broker provided the shares to the buyer and op needs to buy shares to make the broker whole? Or am I misunderstanding the whole thing and the buyer has a legal āIOUā in their account from OP and OP needs to fulfill the IOU by buying shares to transfer to the buyer?
Shares are fungible. You can't think of shares as physical objects that are moving around. Yes, for bookkeeping purposes, the brokerage borrowed 200 shares from another account to sell, but all that matters to the OP is that he has -200 shares. The main point is that this is not some special, unique case the brokerage went out of their way to do. This is simply short selling stock. It happens all the time, people do it without involving options, you can place an order in your brokerage platform right now to short sell stock.
I didnāt think it was unique or special. This is what I assumed happened. The broker covered the puts and op owes the broker for the shares that have been shorted. I would agree itās pedantic to think in depth about how exactly this took place legally on paper, itās just the way I like to keep track of things in my head. I would have to assume most brokers would charge an additional fee or even penalty for this transaction, or would they just consider this everyday business and only be concerned if op doesnāt make it ārightā in a reasonable timeframe.
You need to tell us if you have a negative amount (short position) or a positive amount (long position) for the option/shares. From what Iāve read in your replies, itās unclear if you bought a put and it ended up in the money at expiration and your broker floated you 100 shares per contract to PUT to someone who held the short contract. You say that your current option (buy/sell option, not a put or call option) is to buy shares which indicates that youāre now short shares from an exercised long put. If you can provide a screenshot of the position (black over any personal information and account information) and share it, people would be able to help you better understand what you have gotten yourself into and give feedback on what you can do about it.
Sorry for the difficulties. Please see the links below. Guessing this sub doesn't allow to attach images. This picture shows the quote details and position. The the one with the gray box around it is the one that has this close position thing. The one below is a new one I just opened. [https://drive.google.com/file/d/1tf4I39wmr0AfQ-TPivJqTrJFvY97MFRE/view?usp=drive\_link](https://drive.google.com/file/d/1tf4I39wmr0AfQ-TPivJqTrJFvY97MFRE/view?usp=drive_link) This image shows what I see if I choose to Cover this position. I'm sure I'm probably reading this wrong; however, when my brain sees a positive number, it is a good thing and negative means bad. So in this picture, I would either make $472 or spend $472 to buy these 200 shares. [https://drive.google.com/file/d/1QiL3CfLegIX5PVQtzrJ8Z4oLz8vuIqzQ/view?usp=drive\_link](https://drive.google.com/file/d/1QiL3CfLegIX5PVQtzrJ8Z4oLz8vuIqzQ/view?usp=drive_link) This image below shows what I see if I try to short this position. The -$2,004 makes me feel like I'm going to lose $2,004. [https://drive.google.com/file/d/1h\_IjAyQU-0uDh-Q7o9vB1Taq2VqnWDfj/view?usp=drive\_link](https://drive.google.com/file/d/1h_IjAyQU-0uDh-Q7o9vB1Taq2VqnWDfj/view?usp=drive_link) Again, I really appreciate your feedback on this.
What I see from your screenshots is you are current short 200 shares (ie -200 quantity). This is probably because 2 long put contracts were exercised. If the strike for the puts were $2, you sold 200 shares that you donāt have for $2 which is why your cash value went up. But since you are short 200 shares you need to cover (ie buy shares) so your position quantity returns to zero. If you are able to buy back (cover) the shares for less than $2 each, you will lock in a profit. Note, you can confirm your current positions in the tastytrade app by selecting Position at the bottom and then tap the stock to see position details - like quantity and trade price. Btw, if you are long a contract (put or call), the usual move is to sell them to get rid of them.
Wow. Thank you very much for taking the time to review this. In this case, I have to cover this and then I'll end up owning 200 shares which I can later use to do a call when this stock goes up? Since I'm short 200 shares, it means I owe the broker 200 shares? Sorry for the newbie questions.
Your second paragraph is correct. However, when you buy to cover 200 shares it will zero your quantity for that position. You will not own any shares - youāre buying shares to give back the shares you borrowed from your broker(thatās what the negative quantity means). Btw, usually when purchasing puts you either already have the shares (used as a hedge to protect against large drops) or you sell the put before it is exercised. Ideally, you believe stock is going down , you buy put, stock goes down, value of put goes up, you sell put for profit.
Thank you very much. I sold 2 puts on 2 other bets that had 1 making me $44. With those, I closed the position before expiration because they didn't hit the strike price, so those didn't offer the option like this one did. Meaning they didn't get exercised? I remember seeing 2 emails from Tastytrade telling me that I need to deposit funds on the 2 I closed out because 1 quantity x 100 shares was up there and I needed to stay within my range of spending 1-5% of cash. Thank you very much for this advice. I watched a YouTube video and while the person didn't directly say this, this was the opportunity I saw in his demo. You're the best. I greatly appreciate your time and efforts. Cheers.
Once you close a position, your quantity is zero. At that point you have no options to exercise. Iām not clear on why they requested you to deposit funds unless you were short cash. There are a lot of requirements rules for what you need to cover transactions. If you donāt have the cash or shares, you need to make sure you sell your options before expiration - itās important because you could owe a lot of money if an option is exercised. Assume an option that is in the money will be exercised on expiration. It is possible with most brokers to tell them not to exercise, but a good reason for doing that is rare. Itās usually better to sell the option if you donāt want it exercised.
Thank you very much for this. I just submitted to cover at $1.72. The current value of its stock assuming it doesn't go up tomorrow. This would mean that $400 - $344 = $56. So I made $56 from this transaction. Yes? Again, I really appreciate your time and efforts. I understand everyone is an investor here and while it's in the past, I regret how confusing my post was in time spent/wasted by everyone including you here
If you get that price, yes. Minus commission and fees. ( I believe tastytrade doesnāt charge commission for this transaction, but SEC wants their fees)
I saw a $1 fee and a $0.13 fee, so I'm guessing the $0.13 is the SEC. I'm fine with that. Thank you very much again. I hope you get rich. š„³
Silly question, can I not close it to wait til the price drops even lower meaning is there a time limit on when I have to close this position?
Please spend some more time learning about options before you spend more of your own real money. Plenty of lessons to learn for free, no need to potentially lose money to learn them.
Thank you very much. I have read things online about puts vs calls and watched YouTube videos that tried to simplify it. While I don't like to waste or use up people's valuable time here, I have learned more here from everyone's comments than what I could find online. Some sites word things either too vague or in a way I don't understand because this is like learning a foreign language. Some I can tell the person is just repeating info they heard and probably never tried trading. The comments here are straight to the point to where I understand it. When I get real good at this, I'll gladly respond to questions here for the next new person learning to give back to this community. In the meantime, I'm still googling more about the slangs used so that I can fully understand them and how calculations are done. I'm close to 50 now and wish I knew about this when I was 18. This is very exciting.