We take long and short positions. By any chance there’s no inventory to shorten a particular stock then what do you do? You simply buy put options!

You can go deep in-the-money to mimic the stock so that there is  almost no premium on that option. Even though you’re going deep in the money on the option you’ll still be putting up a lot less money versus buying the full amount of the stock. Some people may find this to be the preferred way to trade.

In order to find options prices you can log into your broker assuming that you applied for an options account and get the most accurate quotes. The most accurate quotes will show during the market hours. Sometimes quotes are posted a little strangely after hours.  Here’s a site that has pretty good options chains now you can use.

When buying options in the money one thing you have to keep in mind is that, by expiration, you have to close out your position or else, if in the money, your position will get automatically exercised upon at expiration and your broker will force you to buy equivalent amount of stock.  So you’ll have to have that amount on hand cover your position as you have options.  So you don’t want to go overboard or buy too many extra options if you’re not going to make sure you’re going to get out by expiration with an in the money position.  Usually  you’re broker will email you a few times about it warning you but that depends on your broker.

Or you can simply pay attention and don’t let it expire in the money (which you’re supposed to do anyways and it only takes a few minutes a night. But if you’re close to going in the money by expiration from out out of the money then you have to pay attention since your options can slip into the money and then you’re exercised at expiration.  I you buy options to replace the exact number of shares you would have used in the first place then it’s not a problem because you would have the funds getting assigned the stock. 

Also you can use a contingent order based on time to simply exit your position, no matter what, before the market closes on the day of expiration.  So that makes things easy and it puts the responsibility on your broker’s computers to get you out. . 

Understand that if you are trading options and if you have premium on that option that premium puff will decay over time. The shorter the time to expiration of the option, the faster the premium will decay. So if you want to go deeper in the money but want extra time then you’ll have some extra premium on that ITM position.  But if go out in time a bit more, you’ll get less of a premium decay effect so it won’t cost you very much in premium decay although the deltas are lower compared to buying deep ITM, say, 2 week to expiration options. 

Usually, these STELLAR9  trades last 5 to 7 days and usually 5 days or less.  But sometimes they will go on a little further which means that we will be making more money most of the time as the trade continues on.

STELLAR9 is also an excellent approach for selling naked options and for using credit spreads in options. Just make sure, again, that you have the money cover up your position if exercised upon you.   This simply means that you need to have the money there that you would have used in a stock trade to buy the full value of the stock equivalent to the amount of options contracts you opened, you got into for your options trade.

When you sell an option short you have the obligation to deliver the shares if the option is exercised upon you. An option usually only gets exercised when it is deeper in the money against you with little to no premium left.

All in all, just as long as you have the funds to cover getting assigned the stock per the amount of options position you open then no problem!  You’re good to go!