We read it again and again. That is why FFS and I are baffled. You typed you were forced to buy at 96 when it is trading at 100. Read YOUR OWN POST again and again!
How are options assigned?
- Thread starter spinn
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We read it again and again. That is why FFS and I are baffled. You typed you were forced to buy at 96 when it is trading at 100. Read YOUR OWN POST again and again!
I really do admire you guys.
Nice to see you own up on your mistake in the typing. Do you understand selling puts a bit better now?
If you post the entire trade sequence with instrument, strike and expiry times, I am sure the options gurus here will help break it down for you.
Exactly. Cigarrettes carry a health warning.
Options trading should too.
One day OP will wake up to a depleted account and have no idea what happened.
I don't understand the level of critism for a simple question.
Spinn you sold a put @ strike 100. You mentioned it was ~$4 below this strike price, so depending on the time left til expiraton, you received at least $4 in premium.
I'd be happy someone excercise my short put options early since I can immediately sell the stock, and resell new puts to cpture premiums.
Short puts are akin to placing a GTC order on the underlying at the strike price.
Spinn you sold a put @ strike 100. You mentioned it was ~$4 below this strike price, so depending on the time left til expiraton, you received at least $4 in premium.
I'd be happy someone excercise my short put options early since I can immediately sell the stock, and resell new puts to cpture premiums.
Short puts are akin to placing a GTC order on the underlying at the strike price.
Ok first of all, what's the strike on your put? Is it $100 or $96? Can you confirm this? What was the market price of the stock when it was put to you? It's best if you can show us a screenshot of your assignment history on your position.
@spinn, so the strike price on your put option is at $96 and you were put the stock when the market price was at $100??!!! The "current price" that you put the stock is NOT the current price. It's the strike price on your option which is at $96. So the option was not in the money, it was out-the-money then? LOL So you made a free profit of $4?? The market price of the stock was $100 but you were able to buy the stock at $96, the strike price due to the assignment??!! LOL Well rejoice!! You hit the Option Assignment Jackpot! You got assigned an OTM option!!! Congratulations!!! You made profit without even trying!! What are you complaining about?? LOL
You were able to become the person to buy a stock at $96 which is your strike when it is trading at $100 because 1) some noobs who REALLY lied about their knowledge and experience with options to their brokers elected to exercise their puts when they were making profit with the underlying and you were the lucky option seller that got chosen to be assigned. This is a very rare phenomenon that almost never happens but it does happen once in a very blue moon. Now that more and more retail traders are joining in the options casino, we will see more and more of this happening I guess. Or 2) Somebody was trying to generate a loss for their tax purposes. Options is a zero-sum game. Your free profit is that person's loss.
But regardless, again congratulations!! Instead of bashing you, we should throw a party for you here at ET to celebrate your pwning the noobs with zero effort!!
IF this really happened. Check your assignment history again. Or show us a screenshot of your assignment history.
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It does happen. Some noobs elected to exercise an OTM option or he/she might want to generate a loss for taxes. Notice it wasn't an auto-exercise; it was an early exercise. I have heard it before.
OCC will auto-exercise any ITM options as long as it's $0.01 ITM but it does NOT prevent OTM exercises.
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What if someone needs to close out an estate...And doesn't know what they are doing. Could it happen that way? Clear if from the books...I don't care how!