# How do you 'write' a call?



## Seneca60BC (21 September 2008)

Hi All

How does one go about actually writing (selling) a call option.  How does this work on the ASX ?

Thanks!


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## wayneL (21 September 2008)

If you are on an electronic platform, you just press "sell".

If you have a human broker, you say I want to "sell to open" xyz call option. Make sure to let him know it is covered by stock if that is the case.

That's it.

NB If you're selling naked calls, you will need trading permissions.


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## mazzatelli1000 (21 September 2008)

wayneL said:


> If you are on an electronic platform, you just press "sell".
> 
> If you have a human broker, you say I want to "sell to open" xyz call option. Make sure to let him know it is covered by stock if that is the case.
> 
> ...




Hey WayneL ... I noticed your mood has been getting worse and worse...old age or the markets ?


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## wayneL (21 September 2008)

mazzatelli1000 said:


> Hey WayneL ... I noticed your mood has been getting worse and worse...old age or the markets ?




The markets are great, they're just markets to be traded as best as we can with what we have to work with. It's the idiots in the markets that have me irate.

EG banning short selling without thinking it through and ****ing up the options markets. IDIOTS... MUPPETS... DUNDERKLUMPENS!! (though it looks like they will be getting an exemption, under pressure)

(N.B. But could be grumpy old man syndrome creeping up on me )


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## Seneca60BC (21 September 2008)

hey Wayne

With tha ban on short selling coming into effect on the ASX, does that mean we cannot buy PUT options ?

Cheers


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## Trembling Hand (21 September 2008)

No its not a ban on short selling. Its a ban on Naked shorts.

Wayne you must of had a couple of good weeks 

I normally get accused of being grumpy here when I'm most profitable 

I think its because I lose patients with the fools.


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## GreatPig (21 September 2008)

wayneL said:


> But could be grumpy old man syndrome creeping up on me



Or maybe it's just the gold bug venom...

GP


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## wayneL (21 September 2008)

Trembling Hand said:


> No its not a ban on short selling. Its a ban on Naked shorts.
> 
> Wayne you must of had a couple of good weeks
> 
> ...



After a couple of very ordinary months, I had my best week ever last week. 

The FSA here in the UK and then followed by the SEC in the US has banned ALL short selling on financial stocks, not just naked.


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## mazzatelli1000 (21 September 2008)

wayneL said:


> After a couple of very ordinary months, I had my best week ever last week.
> 
> The FSA here in the UK and then followed by the SEC in the US has banned ALL short selling on financial stocks, not just naked.




I remember this was done so as not to scare the general public from taking out their deposits and putting it under their beds!!

No matter if it was not really due to short selling --- but that was what the mass believed and authorities have implemented this to calm down fears

Not optimal I must say!!!


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## wayneL (21 September 2008)

mazzatelli1000 said:


> I remember this was done so as not to scare the general public from taking out their deposits and putting it under their beds!!
> 
> *No matter if it was not really due to short selling --- but that was what the mass believed *and authorities have implemented this to calm down fears
> 
> Not optimal I must say!!!




And perpetuated by some (one in particular) here who should know better. 

...or should they?   (other comments make me wonder)


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## Timmy (21 September 2008)

mazzatelli1000 said:


> I remember this was done so as not to scare the general public from taking out their deposits and putting it under their beds!!




You can't put your money under the bed, that's where the Fed is.
(Updated saying).


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## mazzatelli1000 (21 September 2008)

Timmy said:


> You can't put your money under the bed, that's where the Fed is.
> (Updated saying).




LOL
No wonder people are scared out of their wits atm...no where to hide!!!


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## chops_a_must (21 September 2008)

Trembling Hand said:


> No its not a ban on short selling. Its a ban on Naked shorts.
> 
> Wayne you must of had a couple of good weeks
> 
> ...




Well... it's a total ban now.

Is there any reason at all to be in the options market at this time?


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## Grinder (21 September 2008)

So does anyone know what the actual implications are for options in the Oz market?


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## wayneL (21 September 2008)

chops_a_must said:


> Well... it's a total ban now.
> 
> Is there any reason at all to be in the options market at this time?




I am so happy that stocks/stock options are no longer are my core trading vehicle. The stock market has become 17th century Salem Massachusetts.

If they mess with my futures, it's war!! Until then, I happily short the crap out of anything as I see fit.

I might even cast an evil spell on the regulators and the muppets who think this is kosher.


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## cutz (21 September 2008)

according to the latest asic release, authorised market makers will be exempt from the covered short ban

cutz


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## wayneL (21 September 2008)

Grinder said:


> So does anyone know what the actual implications are for options in the Oz market?




Unless they give market makers a short selling exemption, spreads will widen right out... IF there is a market.

<edit> ahh see they at least have some sense cutz


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## chops_a_must (21 September 2008)

cutz said:


> according to the latest asic release, authorised market makers with be exempt from the covered short ban
> 
> cutz




It's irrelevant if individual traders are struck for instance, because they can't hedge.

All it means is options become 10X 20X more expensive, so the implied vols are through the roof.

Which means 'risk management' for any of these investment banks or anyone for that matter are non existent, and in the event of an unexpected move, there is absolutely no way to get out or reduce positions without moving the market.


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## cutz (21 September 2008)

yes point taken,

Should be an interesting day tommorrow.


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## wayneL (21 September 2008)

More consequences, glitches and Things That Make You Go Hmmmmm, from http://adamsoptions.blogspot.com/ (Ex market maker)



> A little confusion as to whether MM's have some sort of exemption to the New World Order.
> 
> Just heard on TV that an "Unintended Consequence" was the freezing up of options markets.
> 
> ...


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## Seneca60BC (21 September 2008)

I dont think Long Put options are affected because trading options we do not own the shares and do not have any shares to borrow - unless we write a put - is this correct ?


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## wayneL (21 September 2008)

Seneca60BC said:


> I dont think Long Put options are affected because trading options we do not own the shares and do not have any shares to borrow - unless we write a put - is this correct ?




Option market makers use combinations of options and shares to hedge their risk.

The last thing an MM wants is delta on his books. Because of the pattern of trading by the public, MMs usually end up long delta so must short stock to get neutral.

This means that unless able to short, MM won't take the risk to deal with you... or make the spread ludicrously wide to cover his risk.


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## moXJO (21 September 2008)

This whole thing has gone past the point of stupidity. This will create a massive mess. So much for options trading.


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