Friday or saturday?

noob_trad3r · Dec 14, 2009

If I get stocks called away will I know friday afternoon end of trading day? Like an assignment notice or will it be saturday morning?

I sold a bunch of GE 16 63 cent covered calls that expire this week.

heiasafari · Dec 14, 2009

Quote from noob_trad3r:

If I get stocks called away will I know friday afternoon end of trading day? Like an assignment notice or will it be saturday morning?

I sold a bunch of GE 16 63 cent covered calls that expire this week.

Not before monday, but if they are ITM by 0.01 at the close you will be assigned for sure

spindr0 · Dec 14, 2009

Quote from heiasafari:

Not before monday, but if they are ITM by 0.01 at the close you will be assigned for sure

Assignment notice depends on when you broker completes and releases expiration Friday's statements. For IB, it's usually early Sunday afternoon.

TheGoonior · Dec 14, 2009

Check your broker's policy for assignment.
Some brokers (I believe IB does this) actually require the holder to request assignment for options that are less than $0.05 ITM.

It's best to assume that you will be assigned if they are ITM at all and take some sort of action, however.

Also, some brokers (TOS) will not charge you on commissions to buy back short options less than $0.05, so there's no reason to even quibble over the $0.01.
,

noob_trad3r · Dec 14, 2009

I have to pay to close. But I do not care if I get my shares called away or not. Either way if I keep them or not.

If I have them monday I will write more calls.

dagnyt · Dec 15, 2009

Quote from heiasafari:

Not before monday, but if they are ITM by 0.01 at the close you will be assigned for sure

You are wrong twice.

1) He will know by Sunday afternoon, if he has online access to his brokerage acount.

2) You are never 'assigned for sure' when the option is ITM by a couple of pennies.

It makes perfectly good sense for an individual investor to allow an option to expire worthless - even if ITM by a small amount.

Imagine that someone owns one such call. Why exercise? He would get hit with an assignment fee (perhaps $15) and then have to sell the stock. Another $10 or $15 bucks. All those fees to save $1?

Only an undereducated investor would do that.

Mark
http://blog.mdwoptions.com

dagnyt · Dec 15, 2009

Quote from noob_trad3r:

If I get stocks called away will I know friday afternoon end of trading day? Like an assignment notice or will it be saturday morning?

I sold a bunch of GE 16 63 cent covered calls that expire this week.

YOU NEVER NEVER learn of an assignment the same day.

The assignment of exercise notices occurs at night, well after the amrket is closed.

The assignee is notified early the next morning - except for expiration.

Then the notification arrives Monday morning - unless you can access your account online. The good brokers have the information available Sunday.

Mark

dagnyt · Dec 15, 2009

Quote from TheGoonior:

Check your broker's policy for assignment.
Some brokers (I believe IB does this) actually require the holder to request assignment for options that are less than $0.05 ITM.
,

You are incredibly incorrect.

Someone who is short an option has no rights. None. He/she is NOT allowed to request assignment. Nor can that person request to not be assigned.

Where you may be confused is that ALL BROKERS allow option owners to REQUEST that an option they own NOT BE EXERCISED. And there is no limit on how far ITM.

If you own an option that is ITM by 10 points, you have the right to request that the OCC NOT exercise that option.

No one would do that, but the option owner has that right.

Mark

dagnyt · Dec 15, 2009

Quote from TheGoonior:

Some brokers (I believe IB does this) actually require the holder to request assignment for options that are less than $0.05 ITM.

NO. IB automatically exercises all ITM options, as does every other broker. Not counting the brokers who force small accounts to sell their options.

An option owner may request:

a) DO NOT EXERCISE any time. It does not matter how far ITM the option is.

b) DO EXERCISE any time. It does not matter how far OTM the option is.

Mark

johnnyc · Dec 16, 2009

I believe some brokers will not allow clients to exercise ITM positions if they don't have funds in their account to cover the resulting buy/sell of stock. Check your broker's policy and the option agreement you signed when you opened the account.