I just got an assignment...HELP

[Wetton]

Quote from MTE:

The doubt comes from the fact that you cannot trade options without a basic understanding of them. Whether you're buying or selling them is irrelevant to that knowledge! So, given that you don't have a basic understanding of options, we have naturally expressed some doubt in your experience.

You've proven my point yourself by not being able to calculate your P/L from selling 115 put @ 25, getting assigned and then selling the stock at 91.

Exactly. It's irrelevant if you are buying or selling options. It's evident you didn't understand your risk when you entered into the trade. If you are EXPERIENCED in trading options, you should know what your break even point is.

As for earning a profit on this position, you have gained nothing until you close your stock position. If the stock falls to to $80, you have just lost $10 a share since your cost base is $90.

You really do need to read up on this and stop fooling yourself that you know what you're doing.

 

[volatilitypimp]

Quote from maae10:

I've been buying options on the side for years, successfully. I'm new to the selling side and I'm new to risk-based margin.

This guy is case in point why risk-based margin on an already leveraged position(short options)is the worst idea regulators have had in a long time.

Isn't anybody else curious as to why they decided to give Joe Sixpack professional leverage? It seems absurd to me.


Would you give a doctor a scalpel for open heart surgery? yes. Would you give this guy a scalpel to perform open heart on himself? Well, you probably could, but why?

 

[maae10]

Quote from Wetton:

Exactly. It's irrelevant if you are buying or selling options. It's evident you didn't understand your risk when you entered into the trade. If you are EXPERIENCED in trading options, you should know what your break even point is.

Do you read my reply to that post?

 

[maae10]

Quote from volatilitypimp:
Isn't anybody else curious as to why they decided to give Joe Sixpack professional leverage? It seems absurd to me.

Because I showed them my numbers for the last three years and explained my strategy to them.

To be honest it's astonishing for me to hear all this. It's weird to be told you don't know anything when you've been making money in the market for years. I think part of it has to do with the different mentalities of technical traders and stock pickers.

 

[RichardRimes]

Quote from maae10:

I'm a little new to the game and I got an e-mail saying

"BASED ON AN ASSIGNMENT FROM OCC, YOUR ACCOUNT HAS BEEN ALLOCATED THE FOLLOWING ASSIGNMENT ON SHORT OPTION POSITIONS"

I just picked up this position yesterday. Do I need to purchase the stocks myself to cover or will the prop firm do it for me?

I sold puts in the money and the price went up a smidgen, I still get to keep the sale money to offset the shares I need to buy......right? I'm only going to take a small loss.

shares were assigned, your the proud owner now of apple shares. You do have a choice to sell the stock now and perhaps make a small profit on the total transaction or hold onto the shares if you still think they will rise. Right now it appears that you have a small loss due to commission and slippage.

One more option for you at this point is to do a ratio-write if you are still bullish on the stock. You have say 600 shares of stock (that were assigned) you can now buy 4 June calls (ATM) give a chance for the stock to go up then sell 10 (contracts) OTM calls which will basically pay for your call spread. Stock goes up your gold...stock goes down you lose more.

 

[Wetton]

Quote from maae10:

Do you read my reply to that post?

Sorry, I just re-read your posts and it's quite apparent you are an expert in the field of options. Sorry if my remarks were rude.

Please do let us know when your book is published. Many thanks.

 

[maae10]

Quote from Wetton:

Sorry, I just re-read your posts and it's quite apparent you are an expert in the field of options. Sorry if my remarks were rude.

Please do let us know when your book is published. Many thanks.

Classy. Very classy.

 

[deviltrader]

good grief, what broker are you using and how did they grant you permission to write uncovered puts?

People are not trying to be rude. It doesn't matter if you say you've been trading for x years, you clearly do not understand options.

How much have you lost in the 3 yrs you've been trading?

 

[maae10]

Quote from deviltrader:

How much have you lost in the 3 yrs you've been trading?

No point in answering that since I'll immediately be branded a liar.

 

[demoship]

maae, honestly, I'd have to say you know jack shit about options if you don't even understand what happens when you exercise options, or are assigned on one.

You couldn't even do the simple math on what your PnL was on your assignment and the underlying price movement. Not to mention that you weren't aware of the early-assignment risk on deep ITM puts.

If there's any doubt in your mind as to what happens when you exercise or are assigned, then you shouldn't trade long options, and definately shouldn't be writing options.

Good luck to your broker when you default on an options position gone bad.