Personal Finance & Money Asked on March 14, 2021
I sold a cash secured put for XYZ stock. It is Aug 20, 2021 expiry for $34 Strike Price. The stock was trading at $31.60 when I sold the PUT. I have received $1K premium for selling that option.
You can be assigned at any time when you are short an in-the-money option but that is unlikely if the option has any remaining time premium. The exception to this general rule would be if there is a pending dividend and the dividend exceeds an ITM put's time premium (not true for a call).
You can buy to close your short put at any time, ending your obligation to buy the stock.
A roll means that you close your existing put and then either:
Sell a different strike put for the same expiration
Sell a put for a later expiration (same or different strike).
In general, the objective of a short put roll is to bring in an additional credit (a later expiration) and/or sell a lower strike price (same or later expiration) both of which lower your risk.
Correct answer by Bob Baerker on March 14, 2021
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