Winding up Puts?? - Aussie Stock Forums

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  1. #1

    Default Winding up Puts??

    My strategy is as a call writer (covered calls). I am looking into buying an OTM Put as insurance on my stock (as well as allowing me to borrow more) but the question is, if the stock gots up and I get exercised what do I do with the purchased Put?
    I could just buy more stock and continue, but what if I don't want to.
    How do I get rid of it!!! If I close the position wouldn't I loose the time/money still left in the put?? But if I sell it and the market goes down aren't I then forced to buy the stock? What do I do?

    Or is there something I am missing??

  2. #2

    Join Date
    Aug 2008

    Default Re: Winding up Puts??

    Hi bucket183,

    Suggest getting to know the the basics here http://www.asx.com.au/products/optio...ation/faqs.htm before getting too involved with options.

    Basically if the stock increases in value the long put decreases in value, if the stock gets slammed the long put increases in value then you can just sell the contracts on market.

    Quote Originally Posted by bucket183 View Post
    But if I sell it and the market goes down aren't I then forced to buy the stock? What do I do?
    Your covered calls have been assigned, the long put has been sold, why are you under the impression you still have obligations ?

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