Put Options?

[MistakesWereMade]

What would happen to put options in the event of a short squeeze?

You're not obligated to cover them right?

 

[ACstudio]

It depends on whether you bought them or sold them. Buying an option give you a right....selling an option gives you an obligation.

 

[gerryg]

What would happen to put options in the event of a short squeeze?

You're not obligated to cover them right?

Yes because you pay premium to obtain that right.. Both on call and put option.. At least my trading with Optiontrade is subject to that rules.. Other couple of BO brokers I tried have the same device, I remember

 

[MistakesWereMade]

Yes because you pay premium to obtain that right.. Both on call and put option.. At least my trading with Optiontrade is subject to that rules.. Other couple of BO brokers I tried have the same device, I remember

Alright thanks didn't think so too, would be scary if you ended up covering 10000+ contracts..

 

[ACstudio]

Alright thanks didn't think so too, would be scary if you ended up covering 10000+ contracts..

It wouldn't change anything even if you were. Your risk profile will be the same. Your buying power may go in the red if your account has insufficient capital to cover the position. Either way you can simply flatten the position and everything will snap back into place and your P/L will be unchanged providing the price hasn't moved before you can flatten. The brokerage will always let you close out a position either way. If you get exercised on the short option of a spread then simply exercise your long option and all will snap back into place giving you max profit. Takes a couple of minutes as it is done manually but it won't change anything.