Early Assignment

The_Krakenite

The_Krakenite

So, weeks back I was puzzled why I got assigned on my Netflix Short-Put by half a month. We determined that because of rising interest-rates and the fact I was deep ITM that it was a possible motive.

Now I have a different early assignment experience.

Today my covered-call on XEG was to expire. I was planning on rolling it this afternoon as it fell ITM, and I wanted to hold my stock long-term.

But then low & behold, I see that around 5 am this morning, my XEG shares all got called away. That's 15 contracts in total, and there was no dividend announced.

Now I'm puzzled again. The underlay was only at $16.39 or so today.

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The_Krakenite said:
So, weeks back I was puzzled why I got assigned on my Netflix Short-Put by half a month. We determined that because of rising interest-rates and the fact I was deep ITM that it was a possible motive.

Now I have a different early assignment experience.

Today my covered-call on XEG was to expire. I was planning on rolling it this afternoon as it fell ITM, and I wanted to hold my stock long-term.

But then low & behold, I see that around 5 am this morning, my XEG shares all got called away. That's 15 contracts in total, and there was no dividend announced.

Now I'm puzzled again. The underlay was only at $16.39 or so today.

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No way to know for sure. Call buyer probably, wanted the shares for whatever reason. Most times, call or put buyers will just close the position. 99% of the time, I just close my positions. I exercised only once.
 
What was the bid-ask spread last night right before the close? 16.39 is pretty far away from 14.25. The option should have had a delta of 1 and no extrinsic value left. Most brokers charge ~$0.60 / contract to close it. Or exercise it for free and then just sell the shares at a lower commission. So around $10 in commissions vs. $1 or free.

Not in this case, but sometimes people will also exercise if the stock makes a big move after hours and they want to lock in profit. They will buy or sell shares to neutralize their delta and then exercise the option later to close the position.
 
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