Number of words in this post: 89

4 outcomes of cash secured puts:

  1. Option expires OTM:
    • Keep the premium.
    • Collateral is freed to use.
  2. Option gets assigned ITM:
    • Keep the premium.
    • Collateral is used to purchase the underlying stock shares at strike price.
      • You are okay or intented to own the underlying stock, hoping that it will rebounce above the strike price.
  3. Rollover:
    • Buy-to-close on an option that’s already ITM, and sell an option that’s in the future, OTM.
    • Collect more premium.
    • Collateral changes.
  4. Buy-to-close:
    • Not much value left in the options.
    • Free up the collateral.

tags: investment  option