Do Option Sellers Have a Trading Edge?
- Thread starter xelite777
- Start date
You are absolutely right Magna, terribly sorry for these off-topic comments.
My apologies as well... Will stop.
That was a strange tangent true story... Option selling has an edge sometimes is what my answer is.
You established the following position:
Long 100 ABCD 150 Call
Long 100 ABCD 150 Put
If the price of ABCD is $150 at expiration, what is the resulting ABCD position in your account on the business day following expiration:
a. Flat or no position in ABCD
b. Long 100,000 shares of ABCD
c. Short 100,000 shares of ABCD
d. Both B and C
Answer: a -> is this correct?
Long 100 ABCD 150 Call
Long 100 ABCD 150 Put
If the price of ABCD is $150 at expiration, what is the resulting ABCD position in your account on the business day following expiration:
a. Flat or no position in ABCD
b. Long 100,000 shares of ABCD
c. Short 100,000 shares of ABCD
d. Both B and C
Answer: a -> is this correct?
Well b and c and d are all impossible since 100 contracts at 100 shares is 10,000 shares. So by the process of elimination a must be correct.
The answer would be "A" If you are long options, you are in the drivers seat regarding exercise. If the stock goes out at exactly 150, neither option would be auto exercised as neither are in the money and would expire worthless. If the stock goes out even .01 lower or higher your in the money options would be auto exercised, although you have the ability to request the broker not exercise the options.