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I just started selling the cash secured puts. I was under the impression that all options unless in the money expire worthless on the expiration day but apparently that's not the case. I had sold a put for $3.40 and bought it back for $2.40 before close but it's last price at the market close on Friday was $4.25, so had I held the option thinking that it would expire worthless, I would have lost $85.00. It was a TSLA put for $635, stock closed at $675 so I am wondering how come it wasn't worthless? Also had I not bought it back I know that at the close my account would show a loss of $85 but would it later show a profit of full $340 premium on next Saturday when actually that option from last week is delisted?

Thanks

John

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    this would seem to be yet another "stale/bad data" question
    – Fattie
    Dec 21 '20 at 14:06
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The closing price of TSLA is a hot mess for Friday 12/18. Various sites (Yahoo, Marketwatch, NASDAQ, CBOE, IVolatility, etc.) are quoting it as $658.34, $669.50, $695 and now you have added $675. What the closing price was is anybody's guess.

However, I can tell you that at expiration, out-of-the money options expire worthless. Be aware that last price is often a stale quote. The last trade in the option could have occurred minutes or even hours before the close of trading and the stock's price could be significantly higher or lower, making it appear that the option prices are way out of line. For an accurate quote, look at real time prices.

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  • So based upon your reply, had I not closed that option position, I would have received the full premium of $340 eventually since option was out of the money and worthless by the weekend. Thanks
    – JohnZee
    Dec 20 '20 at 21:08
  • You received the premium when you sold the option. The question is whether or not you would have been forced to buy the stock at the strike price.
    – D Stanley
    Dec 21 '20 at 14:20
  • @JohnZee - There are 3 outcomes. (1) You buy to close the option before expiration, giving back some, all or even more premium than you received, (2) the option expires worthless and you keep all of the premium received and (3) the put expires ITM and you must buy the stock for the strike price less the premium received. Dec 21 '20 at 15:19

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