Are you selling out of the money puts? Thats how traders lost their shirts during crash of 1987 by selling out of the money puts. They hit.
The problem with the thought that its ok to sell puts if you are happy to buy the stock at that price is that your thesis is that the price will go up. But if it goes up too early then you dont end up owning the stock, you end up collecting a small amount of premium (and then probably chasing the stock all the way up). So you earn virtually nothing for being ‘right’ selling naked otm puts isnt always a terrible idea, but as a standalone trade it pretty much always is. The only way I can see it being sensible is within the context of a portfolio. but on a side note, I trade a portfolio with a fairly short term time horizon, so my capacity for pain is much more limited than some, which for me makes negative gamma big no no if I want to be able to sleep
Stay away from GM IMO…if you want to dabble in naked puts i think there are safer names…GECC is in major trouble…wouldnt be surprised if they had to sell some assets in the future
So just to do the paper trade, if you had sold one Nov 17.5 put yesterday in your Fidelity account you would put up about $5000 in margin to collect $800 in premium. Today those puts are up to 1.24 from 0.80 so you are down $440 (in a day). So you have $5000 sitting around doing nothing and they could call you up for an additional $440. So to make $800 you have to come up with another $440…
yeah, the main issue is the margin post required - just ties up your funds