UpstateAg said:
If you bought it, it expires worthless. And I'm guessing you have restrictions that won't let you sell naked puts.
Nitpick, there's no such thing as a naked put. A sold put is just covered by cash (or other equities, though, your broker probably will only consider a portion of any other equity positions as sufficient coverage since all equities have some level of correlation). Depending on your brokerage, level of trading account, and the volatility of the underlying, the amount of "coverage" will vary. In basic accounts, you likely have to have the full cash amount in reserve in the event the stock went to zero (you'd have to buy the the shares at the strike price, but immediate liquidation of the shares would produce zero value since the shares are worthless).
A sold call can be "naked" as their is technically no amount of cash (or other equity) that can cover the potential gains that the call could see (i.e. there is no limit on the upper value an underlying stock can theoretically go to). However, just like some brokerages and certain trading account levels do not require "full coverage" on any sold puts, they will often let you sell "naked" calls but require that your account hold a significant amount of cash or other equities to "cover" the position should the underlying move against your position (i.e. stock goes up).
In either case, if the underlying moves against you, the brokerage will likely reassess your "coverage ratio" and if it is insufficient, you will be in a margin call and required to either close the position or post more collateral (cash or equities).
