Anyone using covered puts

[crimsonghost747]

(11-30-2018, 11:26 AM)Kerim Wrote:

• When you say "expired worthless," you mean that the option was not exercised, you pocketed the premium, and were free to move on and use the cash that had been securing the put for your next endeavor, right?
  
• What exactly do you mean when you say that you took a loss on CVX (for example)? Do you mean that the share price was lower than the strike price at expiration and so your "loss" was the difference between the strike price and the market price that you were required to pay (after accounting for the premium that you collected for selling the put)? Do you really consider this a loss, since you acknowledge (I think?!) that you would have been happy buying at the strike price at the time you sold the put?
  

Thanks again!

Yes, when he says "expired worthless" then that means that the option ran it's course and expired while being out of the money. In this case, on the final day, the option's price hits $0 because exercising it would only lead to a loss thus making it absolutely worthless.

And that brings us to our second point.. well we all have our opinions but if the plan is to hold long term then I would certainly consider that a loss.
For example stock X is trading at $28 today. You have sold a put option with a strike of $30. You will be paying $3000 for something that is currently worth $2800. So I don't see any other way than saying "I lost $200 minus the premium".