I want to sell put options. Do I select Buy to Open (action) Put (Option Type)?

Question

I use Sharebuilder. The terminology used has me a little confused. What would I pick to sell put options?

Answer 1

Based on the wording of your question, you should not be trading options.



If you want to SELL anything, there's no way you would enter BUY



You should enter SELL, the system will know if you have an option position to close out.

However, if you are not approved for option trading, the screen that you have access to may not give you option choices.



This question should have been directed to the firm, but then again, Sharebuilder is not the type of firm that any knowledgeable person would use to trade options/

Answer 2

The following information is straight from ShareBuilder and I post it as notification that they are not overly options friendly. If you are considering them to do options trading be forwarned that they may not allow certain option trades. Some of the very same trades that Motley Fool Pro may recommend. :-(



From ShareBuilder Customer Service



Hi IMWINN,



I hope you are having a great week. It sounds like you're interested in writing (selling) a put option to open a position. The strategy of writing a put contract has a risky reputation, so we decided not to offer this type of investing currently. However, we are constantly changing and updating our products, so I’ll make sure another thumbs up for this strategy is added to our compilation of Customer requests.



Just to recap, what we do offer right now is up to level two options trading - which allows an investor to write covered call options or to buy a call or put option to open a position. You can sell a put option you already own to close a current position, you just can't sell (aka write) a put to open a position.

Answer 3

Sharebuilder Options

Answer 4

Sell to Open (action) Put (option type).

My guess is that you are confused because it's not in your list.

You're account probably doesn't let you sell a naked Put.

You do know that if you sell a naked Put and it is exercised you will have to buy the stock at the strike price of the Put, right?

Answer 5

What do you mean by you want to "sell put options"? If you want to short a put option, which is what I reckon you want to do by "selling" put options, you would use the SELL TO OPEN order. However, if you want to buy a put option in order to profit when the stock goes DOWN, you would BUY TO OPEN those put options.