Ok, so here is my plan. I wanted to buy put options which will sell Tesla stock at Strike price 900 Euro in June, 2021. The price for an option is 2.3 Euro and I will buy 1000 options (total cost to buy 2300 Euro). I'm using TradeRepublic broker.
If I'm right, in June, Tesla stock price will be at 400 Euro, and I hold the options until that date. It means, I have the right to sell 1000 Tesla stocks at 900 Euro. However, suppose I only have 1000 Euro left in the account and I don't have 1000 * 400 = 400 000 Euro to buy 1000 stocks and sell all with 900 * 100 = 900 000 Euro.
What will happen in this case?
- Will the broker automatically buy 1000 stocks at 400 Euro and sell them at 900 Euro and just give the money gain (900 000 - 400 000 - some fee) to my account (+500 000 Euro)?
- Or my options are voided as I don't have money to buy stocks to sells when the options expire, and I'm lost all the money (2300 Euro) which I used to buy options?