Assigned Short Call Iron Condor

L

Live2learnthis

I sold an iron condor (5 contracts) on Citibank with the call strike at 75/76. On Friday is was hanging around $74.50 all day and then closed at $75.20. I already got the email from TD Ameritrade that I have been assigned. I’m $0.20 in the money. Do I need to purchase the 500 shares of C at the opening bell Monday?

I’ve been assigned before but it has always been past the purchased call and TD worked it call out. Thanks for the help!
 
Live2learnthis said:
I sold an iron condor (5 contracts) on Citibank with the call strike at 75/76. On Friday is was hanging around $74.50 all day and then closed at $75.20. I already got the email from TD Ameritrade that I have been assigned. I’m $0.20 in the money. Do I need to purchase the 500 shares of C at the opening bell Monday?

I’ve been assigned before but it has always been past the purchased call and TD worked it call out. Thanks for the help!
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yes. You will be short 500 shares. Hopefully the market won’t rip on monday
 
Live2learnthis said:
Thanks. The Broker won’t do it automatically though, correct? I will need to purchase 500 at the opening bell? Should I put a working order in now?
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not unless it puts you into a margin call.

you should wait until Monday morning and see what the market is doing. Your goal should be to beat 75.2 (which was your entry price).

at least that’s what I would do.
 
newwurldmn said:
not unless it puts you into a margin call.

you should wait until Monday morning and see what the market is doing. Your goal should be to beat 75.2 (which was your entry price).

at least that’s what I would do.
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Thank you. My margin is outside of that.
 
Live2learnthis said:
I sold an iron condor (5 contracts) on Citibank with the call strike at 75/76. On Friday is was hanging around $74.50 all day and then closed at $75.20. I already got the email from TD Ameritrade that I have been assigned. I’m $0.20 in the money. Do I need to purchase the 500 shares of C at the opening bell Monday?

I’ve been assigned before but it has always been past the purchased call and TD worked it call out. Thanks for the help!
More...


When you're assigned on a vertical (vert, fly, condor, etc.) the long ITM leg is automatically exercised so you aren't left with a share position, post-assignment on your short. IOW, if you're long the C 70/75 call spread with shares at 76 -> the long 500 from 70 is offset by the short 500 from 75. You receive the full $500 per contract.

A iron differs from the call or put fly (natural) as you can only be ITM on one wing, and often just the short. TDA didn't "handle it" per say. It's automatic.
 
Live2learnthis said:
I sold an iron condor (5 contracts) on Citibank with the call strike at 75/76. On Friday is was hanging around $74.50 all day and then closed at $75.20. I already got the email from TD Ameritrade that I have been assigned. I’m $0.20 in the money. Do I need to purchase the 500 shares of C at the opening bell Monday?
More...

Yes if you want to be flat in your position of C. Otherwise if you think it's going to go down, you can hold onto the short from the assignment and hedge at the same time.
 
Live2learnthis said:
Thanks. The Broker won’t do it automatically though, correct? I will need to purchase 500 at the opening bell? Should I put a working order in now?
More...

No the broker just handles the assignment part to make sure you fulfill your obligation under the option contract. After that, whatever you do with the shares is your thing. If you know for sure you are going to get assigned, what I would do is get up earlier to trade pre-market at 4:00 AM EST and not wait until the opening bell. In case C dips during the pre-market after the sudden surge on Friday, you might be able to buy it cheaper and avoid the loss when you get assigned. Remember you need to beat $75, not $75.20 cuz that's the short call strike that you got assigned at so you need to make sure to buy the shares below $75 to be even with the commissions as TD charges the full commission on assignment (yeah it's a ripoff!). Don't wait until the opening bell. With the opening auctions, you never know what can happen with the stock price.

Good luck!
 
JSOP said:
No the broker just handles the assignment part to make sure you fulfill your obligation under the option contract. After that, whatever you do with the shares is your thing. If you know for sure you are going to get assigned, what I would do is get up earlier to trade pre-market at 4:00 AM EST and not wait until the opening bell. In case C dips during the pre-market after the sudden surge on Friday, you might be able to buy it cheaper and avoid the loss when you get assigned. Remember you need to beat $75, not $75.20 cuz that's the short call strike that you got assigned at so you need to make sure to buy the shares below $75 to be even with the commissions as TD charges the full commission on assignment (yeah it's a ripoff!). Don't wait until the opening bell. With the opening auctions, you never know what can happen with the stock price.

Good luck!
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Thank you!!! Could I place a $75 limit order in for the extended hours now?
 
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