Comment on Basics on Options Shorting/Writing

Nithin Kamath commented on 02 Nov 2014, 02:13 PM

If there is no buyer, you can’t short and your market order gets cancelled. You can place a limit selling order and hope someone buys it from you at that price.

So if you have shorted and liquidity dries up, it is a very tricky situation to be in, you can’t do nothing. If market is moving in your favor there is no issue, but if it goes against you the only thing you will be able to do is to take position in another contract to hedge this risk. On the expiry day, if your option is OTM, then of course it expires at 0.

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