Sarwa does not support naked short calls or puts. When you take a short position on an option contract, you must secure it with either the underlying stocks or cash.
- Stock Collateral: For selling a call option, you must cover it with 100 shares of the underlying asset. If the option is assigned, those shares will be sold from your account at the strike price. Note that stocks used as collateral for a short call position cannot be sold until the short option position is closed.
- Cash Collateral: For selling a put option, you need enough cash to buy 100 shares of the underlying asset if assigned. For each contract sold, you must have enough cash to buy 100 shares of the underlying asset at the strike price. This cash cannot be used for other purchases or withdrawn from the account while it is being used as collateral.