I just got an assignment...HELP

[maae10]

Quote from MTE:

Good start mate! Your 4th post and you're insulting others already! Congrats for becoming the first member of my ignore list!

Looks like he'll fit right it then....

Quote from demoship:

The only reason people are insulting maae is because he claimed to have been trading options for 3 years, but doesn't understand how a simple assignment works.

Nobody bashes people when the say "i'm a noob, how does this work?" But when you claim to do something for 3 years, and it appears to be false, ppl will call you out on it.

But I clearly said from the very start that I'm new to selling options and assignments only happen to sellers.

This must be the third time I'm saying this and people still bring it up like they bring up the P&L stupidity. Why don't people want to hear the other side?

 

[Bsulli]

Quote from maae10:

But I clearly said from the very start that I'm new to selling options and assignments only happen to sellers.

I respond to you early and as was nice about it and will continue to try and do it in the same vein, I hope it's taken as such. I haven't post since yesterday but I must respectively and completely disagree with this statement and hopefully you will hear me out first. Your first post only said that you are new to this game, not to selling option positions to open the trade. You went on to mention in the very first post that you bought a put not sold it but was wondering if I could keep the money. I could comment on the other portions of that first post but anyone can go back and read it for itself and I don't want to continue contributing to what has become a bloodletting. Maybe it was a case of not clearly stating your case which you did clear up later in the first part of the thread. What commonly happens is like anything else in both life and chat boards. First impressions are everything and most people won't cut you any slack after that. I would chalk it up to that and move on. I would characterize some of the early advice giving to you as attacks but others as simply being blunt and to the point. The over riding recommendations was to stop selling options until sometime that you had obtain additional knowledge in the area of selling positions to open an option trade. Personally I felt you over reacted to blunt advice instead of taking it and that is why I didn't follow up with later posts with links to answers you were seeking. I will only suggest to you at this point is to read the book McMillian on Options which some local libraries have and the other suggest materials offered earlier in the thread. You probably are a good stock picker and may have done well, I have not real way of knowing nor do others. Most only jumped on the first post and that really didn't paint you in the light you were hoping to for.

I will be unscribing from this thread at this point because it has run it's course whether the outcome was what anyone was hoping for.

Good luck and good trading.

Bsulli

 

[demoship]

So you traded options for 3 years, without knowing how they work.

Knowing how options works includes what happens at exercise or assignment.

I find it very hard to believe that someone who has 3 years options experience has no idea what happens to the writer upon assignment.

 

[stylark3]

Quote from maae10:


People keep saying that nobody is being rude and they're not really jumping on you. That's simply not true, aside from the obviously rude post my not being able to calculate a simple P&L keeps being brought up even though it's false.


Is there something about my post that triggered something? Are most of the folk here just not very nice? I frequent a few message boards (though this is the first financial one I have posted on) and I have never gotten such a welcome anywhere else.

Welcome To The Club!!!

People here are very rude. So, I totally agree with you.

You should be able to come here and get a simple answer
to a simple question without having insults and condescending
remarks hurled at you.

But, you are not going to find much kindness on this site as I have discovered personally.

I think I saw one helpful post to your original question out of 12 pages of post.

I am not an options trader but I know the basics farely well.
So, I will attempt to answer your question by saying I believe
you are calculating correctly in saying that at this point you are
$1 ahead in your account.

Now that you own the stock, you can sell covered calls against it
and receive the premium immediately or you can sell some are all of your stock if you think the price may drop further or you can by puts to protect your share ownership if you believe there is a chance of the price dropping further. On the other hand, if you think the stock will start an uptrend from here then, keep the shares for a while and continue to write calls against it.

For the future, if you decide to sell naked puts again, you need to monitor the stock price and make sure to close out your position by buying puts to close the position if you are approaching the
break-even point -- this will usually prevent an assignment from
happening to you.

Happy Trading...

 

[maae10]

Quote from stylark3:

Welcome To The Club!!!

For the future, if you decide to sell naked puts again, you need to monitor the stock price and make sure to close out your position by buying puts to close the position if you are approaching the
break-even point -- this will usually prevent an assignment from
happening to you.

Happy Trading...

Thanks for giving me some faith in humanity again

Aside from it being a nuisance. Is there a compelling reason I wouldn't want to be assigned assuming I am up on the position? I could just sell the stock the next day if I want to.

 

[stylark3]

Quote from stylark3:

On the other hand, if you think the stock will start an uptrend from here then, keep the shares for a while and continue to write calls against it.

I would like to post an addendum to this previous remark.

I believe the ideal situation in writing covered calls against
your stock ownership at this point would be to have the
stock price move sideways for a while. So, if you think the
stock price will start an uptrend then just sell the stock later
for a higher price and/or buy calls. If you think the stock
will drop more then buy puts or just get out of your ownership
position altogether. On the other hand, you could follow the
post above and write covered calls against you stock ownership
anyway in which case, if the stock drops more, your covered
calls will increase in value but the dropping stock
price will weigh against your gains in the account as it continues
to drop.

 

[MTE]

Quote from maae10:

Thanks for giving me some faith in humanity again

Aside from it being a nuisance. Is there a compelling reason I wouldn't want to be assigned assuming I am up on the position? I could just sell the stock the next day if I want to.

Getting assigned means that you carry gap risk overnight. That is, you're assigned, but you can't close out the position until the next day and the stock may gap against you.

Also, if you're assigned on the short call going into ex-dividend then you'll be responsible for the dividend.

 

[stylark3]

Quote from maae10:

Thanks for giving me some faith in humanity again

Aside from it being a nuisance. Is there a compelling reason I wouldn't want to be assigned assuming I am up on the position? I could just sell the stock the next day if I want to.

I believe the danger in getting assigned is that you could have
been assigned at a much lower price. I think you got lucky in this assignment in that you still had a profit of $1 after the excercise.
So, for this reason, I think you should always want to avoid assignments because you never know what you are going to get.
If you had been assigned at a much lower price, you could have
been wiped out.

Always trade the premiums only to avoid looming catatrophies.

 

[semiopen]

Quote from MTE:

Getting assigned means that you carry gap risk overnight. That is, you're assigned, but you can't close out the position until the next day and the stock may gap against you.

Also, if you're assigned on the short call going into ex-dividend then you'll be responsible for the dividend.

Plus your broker probably won't charge you real good commission rates...

Haven't read all the posts here, but you really shouldn't be holding a short option position when the option has little or no premium.

 

[JimmyJam]

Quote from stylark3:

I believe the danger in getting assigned is that you could have
been assigned at a much lower price. I think you got lucky in this assignment in that you still had a profit of $1 after the excercise.
So, for this reason, I think you should always want to avoid assignments because you never know what you are going to get.
If you had been assigned at a much lower price, you could have been wiped out.

Always trade the premiums only to avoid looming catatrophies.

That was the whole point of why we were coming down so hard, Mr. Nice Cop.

The OP got lucky this time, but the markets can be very unforgiving.

JJ