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I just got an assignment...HELP
- Thread starter maae10
- Start date
Quote from MTE:
Stock at 90, strike 115, selling for 25. There's absolutely no time value in this option, my friend.
Your comments make me doubt you have been trading options for years, but who am I to judge you...
Well, I'm certainly not going to waste any time trying convince you of my experience. As I stated earlier my experience up until now has been buying options, not selling them. If you'll be so kind as to humor me....
The numbers I quoted were rounded out to make it easy to understand. Obviously the stock wasn't at exactly 90 and the selling price wasn't exactly 25. What are the odds of that happening. There was about .30-.40 in time decay IIRC.
Instead of debating whether I'm legit or not, perhaps you could help me with some of the questions I had. Sorry to sound rude, nobody likes being called a fraud (regardless of how gently you put it).
Quote from maae10:
Can I sell the shares and then use that money to sell the same exact options?
NO, you will be naked again! What I was suggesting writing a covered call on the stock that was assigned to you but you must own the stock in your account. You can sell/go naked a call which isn't covered but you better darn sure you call the direction right or otherwise you will end up in the same exact situation that started this thread.
With the puts you sold you got assigned. With a naked call and not getting called to cover your nake trade postion then you have to buy calls at a higher price on the calls themselves. If your naked the calls and you get assigned then you have to go out into the open market and buy the stock. Example, your naked the calls at 30 strike and the stock is trading at 40 on the market, you buy stock at 40. You then have to deliver the stock to the requestor at 30 and hope that your credit premium was enough to save your butt.
You really need to read and study more about options before continuing trading them in my opinion when it comes to the selling side anyway. Not saying you don't have plenty of experience but selling or going naked can be very riskly as well as rewarding.
Good luck
Bsulli
Quote from maae10:
Well, I'm certainly not going to waste any time trying convince you of my experience. As I stated earlier my experience up until now has been buying options, not selling them. If you'll be so kind as to humor me....
The numbers I quoted were rounded out to make it easy to understand. Obviously the stock wasn't at exactly 90 and the selling price wasn't exactly 25. What are the odds of that happening. There was about .30-.40 in time decay IIRC.
Instead of debating whether I'm legit or not, perhaps you could help me with some of the questions I had. Sorry to sound rude, nobody likes being called a fraud (regardless of how gently you put it).
He doesn't think you're a fraud.
He just thinks you don't know what the hell you're doing.
To paraphrase what I said before "it's better to be lucky, than smart" ... sure, but eventually, that luck is going to run out on ya.
JJ
Quote from maae10:
Well, I'm certainly not going to waste any time trying convince you of my experience. As I stated earlier my experience up until now has been buying options, not selling them. If you'll be so kind as to humor me....
The numbers I quoted were rounded out to make it easy to understand. Obviously the stock wasn't at exactly 90 and the selling price wasn't exactly 25. What are the odds of that happening. There was about .30-.40 in time decay IIRC.
Instead of debating whether I'm legit or not, perhaps you could help me with some of the questions I had. Sorry to sound rude, nobody likes being called a fraud (regardless of how gently you put it).
I'm not debating whether you're legit or not, I'm just saying that you don't seem to know much about options for someone who's been trading options for 3 years.
Anyway, you seem to lack the basic knowledge of options so pick up some books read them and then come back with questions.
Quote from Bsulli:
NO, you will be naked again! What I was suggesting writing a covered call on the stock that was assigned to you but you must own the stock in your account. You can sell/go naked a call which isn't covered but you better darn sure you call the direction right or otherwise you will end up in the same exact situation that started this thread.
With the puts you sold you got assigned. With a naked call and not getting called to cover your nake trade postion then you have to buy calls at a higher price on the calls themselves. If your naked the calls and you get assigned then you have to go out into the open market and buy the stock. Example, your naked the calls at 30 strike and the stock is trading at 40 on the market, you buy stock at 40. You then have to deliver the stock to the requestor at 30 and hope that your credit premium was enough to save your butt.
You really need to read and study more about options before continuing trading them in my opinion when it comes to the selling side anyway. Not saying you don't have plenty of experience but selling or going naked can be very riskly as well as rewarding.
Good luck
Bsulli
Thanks for your help. Let me put some more information on the table so you can see what I wanted to do.
The options I sold were Apple puts, as stated earlier in the thread they had a strike price of 115 and expire in May. I don't remember the exact numbers but let's say the stock price at the time was 90.35 and the premium was 25 even.
The reasoning behind this trade is, I think the Apple shares will rise on iPhone hype in anticipation for the June launch.
My options (no pun intended) are:
1. To keep these shares in my account and sell covered calls. Calls @ 115 have no value so I would have to sell them at a much lower strike in order for me to make anything decent on it. The 105 strike has just a .25 ask
2. I sell the stocks and buy the same position because I still like the position. I run the risk however of getting assigned again.
3. I sell the stocks and instead sell naked puts at a lower strike price decreasing the chance of getting assigned again but also limiting my upside on the contract.
I'm still trying to understand if I lost any money on this assignment.
Hypothetically speaking.
If I was assigned the stock for $115
Someone paid me a $25 premium
Stock is now trading at $91
Does that mean I made $1 with this assignment?
Lady, you are getting the best of support here. These people treated you fair and square, and bend over backwards to explain things to you which your "Prop firm" should have shown you. Don't be delusional, when you tell people you have XYZ experience, people get very confused, because you are asking very ABC rudimental questions.Quote from maae10:
Well, I'm certainly not going to waste any time trying convince you of my experience. As I stated earlier my experience up until now has been buying options, not selling them. If you'll be so kind as to humor me....
The numbers I quoted were rounded out to make it easy to understand. Obviously the stock wasn't at exactly 90 and the selling price wasn't exactly 25. What are the odds of that happening. There was about .30-.40 in time decay IIRC.
Instead of debating whether I'm legit or not, perhaps you could help me with some of the questions I had. Sorry to sound rude, nobody likes being called a fraud (regardless of how gently you put it).