What's next for a Long Put？
Notes:
A. If you believe that the underlying stock is moving against you, you can close the option position at any time before expiration to take any profit or help limit further losses. This can help avoid the loss of the option's time value. Otherwise, it may expire worthless.
B. In some cases, investors may choose to exercise the option early. However, doing so will result in the loss of the option's time value, so careful consideration is needed before deciding to exercise early. (Exercising out-of-the-money options early requires selecting the "Allow Mandatory Exercise" option; otherwise, the exercise request for out-of-the-money options will be rejected.)To forfeit the exercise: Go to Positions > Click Exercise > Select Forfeit Exercise. Enter the number of option contracts you wish to forfeit exercise.
C. Be sure to monitor the status of your account to avoid losses due to insufficient purchasing power. Click Accounts > Risk Control Status to check your account status.
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How to set up a Long Put on moomoo？
After buying a put option, what might the trader do? | |
Option 1: Close your position | Close position and take potential profits or help limit further losses depending on the option's moneyness Your Profit or Loss = (Closing Premium - Premium Paid) * Contract Multiplier * Number of Contracts |
Option 2: Exercise your position (Assuming the option is ITM) | Exercise the right to sell underlying stock at the strike price on client portal Your Profit or Loss (unrealized) = (Strike Price - Current Stock Price - Premium Paid) * Contract Multiplier * Number of Contracts This profit would be on paper because you would be taking on the short position of the associated underlying stock. To realize the profit, you would have to then buy the shares of the stock. |
Option 3: Roll your position | Close the current option position (realizing any gains and losses) and open a new option position on client portal May be done in an effort to help manage risk or increase potential profit |
Option 4: Take no action. What happens when the option expires? | 1.If the option is out-of-the-money The option's value becomes zero, and you lose the entire premium. 2.If the option is in-the-money Automatic exercise conditions: U.S. stock options: On the expiration date, the options are in-the-money by as little as $0.01 at expiration at market close. Exercise will be completed through physical delivery: U.S. stock options: A. If the account has sufficient purchasing power to exercise, the system will automatically exercise the option. B. If the account does not have sufficient purchasing power to exercise, the system will not automatically exercise the option. You should consider closing the position manually or replenishing the margin; otherwise, the system will liquidate your position. |
This presentation is for informational and educational use only and is not a recommendation or endorsement of any particular investment or investment strategy. Investment information provided in this content is general in nature, strictly for illustrative purposes, and may not be appropriate for all investors. Read more
