Ready-4-ER-at-14
Full time employment: Posting here.
A little dark topic but I have noticed a barrage of make money by selling cash secured puts offers lately and I have also noticed a lot of people here on this site doing it. Also a lot of us are anxious to get back in the market for a hoped for relatively quick recovery. And getting a high return on idle money is a very attractive idea to me.
My thought was if the serious players like the fed are really going to sell off a lot of their stock might this be a good means for them to do it, ie pre buy index puts and then flood the market with sell orders for index contained stock. I suppose the individual bank trading units could then buy back right about when the fed quit selling unless there are specific rules against that.
I was taught to sell puts buying even further out of the money puts or further out in time further out of the money puts to hedge the potential loss. I have no knowledge of any shenanigans nor am I suggesting anything is amiss i just wonder if this is riskier than it seems especially if the market went into a free fall just as your option obligations came due. I am not sure you can buy put options to close positions if a market lock down occurs.
I hope this black swan event never occurs. Just want people to consider and know what worst case scenario might be on any trade. And if I don't understand the risk properly I am open to learn.
My thought was if the serious players like the fed are really going to sell off a lot of their stock might this be a good means for them to do it, ie pre buy index puts and then flood the market with sell orders for index contained stock. I suppose the individual bank trading units could then buy back right about when the fed quit selling unless there are specific rules against that.
I was taught to sell puts buying even further out of the money puts or further out in time further out of the money puts to hedge the potential loss. I have no knowledge of any shenanigans nor am I suggesting anything is amiss i just wonder if this is riskier than it seems especially if the market went into a free fall just as your option obligations came due. I am not sure you can buy put options to close positions if a market lock down occurs.
I hope this black swan event never occurs. Just want people to consider and know what worst case scenario might be on any trade. And if I don't understand the risk properly I am open to learn.