Getting exercised

F

failed_trad3r

Does it cost commissions when getting exercised? for example if commission to buy stock is 10 euros, and you wrote a put, and get exercised the put.
Then do you have to pay commission to buy the stock?:eek:
Because my broker told me exercise is free.
 
Your broker may have meant that if you exercise an option there is no charge, but you still have to pay the commission to buy or sell the stock. And the correct terminology is, if you are long an option you exercise it, if you are short you are assigned. Here is what thinkorswim has on the subject:

https://www.thinkorswim.com/tos/displayPage.tos?webpage=lessonExercise

Exercise is the term used when the owner of a call or put (i.e. someone who has a long position in a call or put) uses his right to buy (in the case of a call) or sell (in the case of a put) the stock. Assignment is the term used when someone who is short a call or put is forced to sell (in the case of the call) or buy (in the case of a put) the stock. Remember, for every option trade there is a buyer and a seller, so if you are short an option, there is someone out there who is long that option and who could exercise.
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If this is so, does it make more sense to write only 1 option of $100 instead of 100 of $1? Because you could get assigned 100 times with 100 times commission? By the way if one guy exercises 10 options, and you wrote 10, do you get asigned all 10 at same time, as if its one order? because if would suck if you got assigned 1 option, then another, then another. its like death by a thousand commissions.
 
Quote from failed_trad3r:

If this is so, does it make more sense to write only 1 option of $100 instead of 100 of $1? Because you could get assigned 100 times with 100 times commission? By the way if one guy exercises 10 options, and you wrote 10, do you get asigned all 10 at same time, as if its one order? because if would suck if you got assigned 1 option, then another, then another. its like death by a thousand commissions.
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It's better to right one option than to wrong any number of options. Even worse is getting exorcised! Feeling like Linda Blair yet?
 
Quote from TheoHornsby:

It's better to right one option than to wrong any number of options. Even worse is getting exorcised! Feeling like Linda Blair yet?
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Im serious!

Also, why are european options american style? That makes no sense, why arent they european style? You know, europe? :D
 
Quote from TheoHornsby:
.....getting exorcised! Feeling like Linda Blair yet?
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The CBOE was established the same year "that movie" hit theaters. The early-70's....gotta love'em......to be 1 year old again, those were the days. :eek: :cool:
 
Quote from failed_trad3r:

If this is so, does it make more sense to write only 1 option of $100 instead of 100 of $1? Because you could get assigned 100 times with 100 times commission? By the way if one guy exercises 10 options, and you wrote 10, do you get asigned all 10 at same time, as if its one order? because if would suck if you got assigned 1 option, then another, then another. its like death by a thousand commissions.
More...

:eek:
 
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