Quote from l3randonf:
I dont have that kind of money so why would they let me make the credit spread trade in the first place. That cant be right.
Quote from l3randonf:
Also what happens if the underlying closes on expiry PAST my credit spread.
Quote from ForexForex:
Maximum risk is the difference between the strikes MINUS credit received. For GOOG that could be $1000.00 - $200.00 = $800.00. My guess is that your broker would never allow the long leg of your position to be closed before the short position.
If one of the legs is approaching ITM then you should close both legs to minimize your loss, and don't wait till expiry.
Quote from l3randonf:
yes I know but I'm trying to understand what happens IF. I also know how to calculate my risks but I dont understand "stock assignments" that are automatic.
All it takes is a web search on "option assignment" and you'll find a gazillion explanations. Here's the first one on the list:Quote from l3randonf:
yes I know but I'm trying to understand what happens IF. I also know how to calculate my risks but I dont understand "stock assignments" that are automatic.