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system
option on an option possible? (have a leap, put to me?)
user
i can sell a put on it a bit out of the money, and i seemingly "win" either way: i.e. make money on selling the put, and either i get to pick up the stock cheaper if xyz goes down, or the put expires worthless. in 2008, i see a bank stock (pick one) trading at $100. i buy that put from you, a $90 strike, and pay you $5 for the option. the bank blew up, and trades for a dollar. i then buy the $1 share and sell it to you for $90. you made $500 on the sale of the put, but lost $8900 when it went bad. you don't win either way, there is a chart you can construct (or a table) showing your profit or loss for every price of the underlying stock. when selling a put, you need to know what happens if the stock goes to zero since the odds of such an occurrence is non-trivial.  a leap is already an option. with the new coding scheme for options, i'm not sure there's really any distinction between a leap and standard option, the leap just starts with a long-till-expiration time. there are no options on leaps that i am aware of, as they are options already.
assistant