Search results

Hi once again thank you for the in depth knowledge. I believe I understand the procedure with the expiration/early assignment. This has been a great help and I can ease my mind knowing I won't be in mountains if lifetime debt. I am sure that this has been a help to a lot of people who didn't...

Thanks for taking time to reply.

Thanks for the response I am very grateful.

Hi thanks for the in depth explanation. Yes this makes sense to me. I think where I was not grasping the concept was that in my head the broker would not be lending the short stock to customers because in reality this short stock would cost them £30000 and to do this for thousands of customers...

Thanks for the response. Not sure I understand how I can be short stock if I don't have capital in my account (£2500) in the first place to buy the stock (£30000 (1 contract at 300 stock price)).

Thanks for the response. To clarify to some points: "The broker will probably just execute an order to buy the stock back at the market price right after the exercise". --Does the buy to cover involve the broker's money as my account can't afford to buy the stock back? "Under US rules, the...

Thank you this makes sense. So in reality, if the buyer exercises they receive 100 shares, the broker lends the money to me and buys the 100 shares if the account doesn't have enough money (as in this example of £2500 account) and I end up owing the broker in the example above approx £27500...

Thanks for the response...this is what I fear but different people are telling me different outcomes.

Hi, thanks for the reply. I sold a bear call spread. Bought a call @ $305. Sold a call @ $300. It would be good to know what happens if the stock price is between the strikes if early assignment happens on the small account of £2500 as described in the post. Also what happens if the...

Hi I am a new options trader and want to ask the more knowledgeable traders some questions on early assignment and small margin accounts. I have an account size of approx £2500 and I trade on Interactive Brokers. I sold 1 contract of calls on Facebook trading at $300. If the buyer decides to...