in FB calendar but now up ~15% any adjustment suggestions?

Quote from rockn:

I have a similar situation. This is a little embarrassing, but I had purchased on thursday the weekly $70 calendar sbux 7/26 & 8/2 and I'm not used to trading weeklies and did nothing yesterday, and now have been excercised on the short side. I don't have the funds either so have a negative balance. I still have the long side also. I had gotten home from work friday and was looking at positions and started thinking of the ramifications and called TOS, and they seemed to imply I could get out of this, to call monday before market open. I'm thinking most likely of course will be gapping higher monday also.
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Since you were assigned the short option, that means you bought the call calendar. This leaves you with a short stock position against the Aug call. There's no risk from the position itself regardless of what the stock does because the long call protects the short stock position.

The easiest thing to do is exercise the long Aug call. That offsets the short stock, and the whole thing goes away. Call TOS before the open and tell them that's what you'll be doing so there's no need for the margin department to jump in and do anything.

You could also try to sell the long call and buy the short stock as a package trade, thus eliminating the exercise fee. But never sell the long option below its real (intrinsic) value.

You might even be able to close the position for a couple pennies above to cover commission costs (see attached).
 

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Quote from newwurldmn:

If you can hold the position the max loss is 16 +- financing costs.

If you can't hold the position your loss will be worse but not substantially as you are long fixed premium at this point.

I would close out the position because I don't like using balance sheet unnecessarily.
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thanks for suggestion newwurldmn
close the position by just exercising the aug9th 26.5c on monday? I think IB dont charge for exercising, just like if you are assigned. or just sell the call and bb the short?
"If you can hold the position the max loss is 16 +- financing costs. " is that the ideal plan? but on aug 9 th, the option expires and there is a possibility (0%!) it will be below 26.5

"If you can't hold the position your loss will be worse but not substantially as you are long fixed premium at this point. "
what do you mean?

thanks again :)
 
Quote from nixodian:

thanks for suggestion newwurldmn
close the position by just exercising the aug9th 26.5c on monday? I think IB dont charge for exercising, just like if you are assigned. or just sell the call and bb the short?
"If you can hold the position the max loss is 16 +- financing costs. " is that the ideal plan? but on aug 9 th, the option expires and there is a possibility (0%!) it will be below 26.5

"If you can't hold the position your loss will be worse but not substantially as you are long fixed premium at this point. "
what do you mean?

thanks again :)
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I don't know if IB charges for exercising or assignments but most brokers do charge for it (like it were a stock transaction).

Right now you are long the 26.5 strike synthetic put.

If you can hold to Aug 9th, you will be down 16 +/- financing costs. If the stock falls below 26.5 you will make money.

If you cannot hold the position (you will get bought in) then you need to understand what the broker will do to you, You need to evaluate your basis risk to the premium of the option. Your biggest risk right now is getting bought in the stock and then the stock collapsing right after that before you can close out the call. The luckiest trade will be you get bought in on the stock and then FB rallies and you make a lot of money on the call.

If you do not want to take this risk, you need to determine how they will buy you in. If the call option is worth very little in time value, it might be worth exercising against your short. This is generally not ideal as you will lose some money (time value remaining on the option).

Worst thing is you exercise your long call and they don't give you a day's grace and buy you in. You wake up tomorrow long stock and the stock craters.

It's not as complicated as this, but you are at the mercy of the broker and IB is the least merciful of the bunch.

This is why you should never allow yourself to be in a position of a margin call. If you couldn't close the trade out befor 4pm (because you were at work) then you shouldn't have had the position on.
 
appreciate everyones input, l have just exercised since there was no time value in the aug 9th long 26.5call other than a few cents, and l know l'd be paying my broker more for holding the short 100. reasonable decision huh?
 
so tempted to do another calendar on it, as monthly chart looks like more upside, getting late here though 03.34am as l write, gn y'all
 
Quote from optionatrix:

I'm dipping my toe into slightly short FB here with weekly time spread 37P. FB might stall at 38 IPO.
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A typical amateur mistake, shorting a hot stock at its all time high. BIG MISTAKE.
 
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