I myself have used vertical spreads before and also other combination spreads, and was able to close out the short ends (buy back) well before expiration.
I have never sold naked puts before tho (I don't want that risk) which to my knowledge does require "level three" options permission.
Perhaps since via the spreads my short positions are technically covered. And I always bought the short side back 1st or used a combo transaction on either end of a spread or other combo to close out vs closing any long side first which would result being fully short on any one side.
...... and no was never paper trades.
But I don't see why a standalone short option couldn't be opened and covered as well ? You just need to have enough cash/margin to cover the position or a certain %, there of, cause if it goes ITM and gets exercised at any time, you now own the 100 shares (and are debited) at said strike for each contract,.... in a short put example.
However, I'm not sure any options permission level allows selling uncovered calls, because the risk would be unlimited.
Au contraire! I sell short Puts on SPY nearly every day and usually Buy to Cover before the close. Perhaps European options must be held to expiration (not sure) but I can guarantee you American options do not and can be covered any time prior to expiry.
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