Guest Posted December 29, 2018 Posted December 29, 2018 Hello I have a question about selling naked (puts or calls) on indices, such as SPX Now, unless I am wrong SPX is a European style, cash settlement ticker, meaning no earlier exercising and no dividend risk (for the options seller) Assuming the above is correct, let's say SPX is trading at 2485 and sell a naked put with a strike price of 2475 what would happen if SPX closed at 2465 at expiry (e.g. the option I sold is now two strikes ITM e.g. $10). I assume I would lose $10 x 100 = $1000 (minus premium collected) Is that correct please, or do I have to factor in anything else (apart from the fact the loss could be a lot higher if the option if further ITM). Thanks very much CXMelga Quote
Humble Posted December 29, 2018 Posted December 29, 2018 Correct. In fact, if you premium was higher than $10, you can actually make a gain. Quote
Guest Posted January 12, 2019 Posted January 12, 2019 Yes, correct. Usually, ITM will have little more premium than it should be. So you have chances of making little profits in your scenario. You should also include brokerage charge to calculate complete losses. Quote
Guest Posted January 13, 2019 Posted January 13, 2019 Probably not a good time to sell premium since SPX vol is only 23%. Quote
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