Re: Introduction of futures and options contracts on 14 additional individual securit
ATM was really a stupid idea
. Corrected in original post (#3)
Regards,
Kalyan.
This holds if you sell an OTM put.
1. Stock moves up, so you make money on the stock and get to keep the premium from selling the put (since the put will expire unexercised).
2. If the stock drops below (strike price minus the premium earned on the put sold), you lose money on the stock and the put, since the put will now be exercised at the strike. If the stock drops below the strike, but does not go below (strike minus premium earned), you lose part of the premium earned.
3. If the stock does not move at all, you are flat on the stock and get to keep the premium earned by selling the put.