Options assignment lotteries

[elt894]

Thanks for the answers! By the way, are the number of contracts exercised published anywhere, or do you just have to guess at it from the change in open interest and trading volume?

 

[ajacobson]

OCC does a wheel to the firms - spins are based on OI at the firm. So if they have 100 to exercise they spin the wheel and it comes up firm A. A has 200 open so they get hit for the entire hundred. Most firms then allocate to customers based on FIFO - the firm has to have a written procedure in place. You mentioned nothing unusual in the after hours which would always be first expectation. The second, often surprisingly, is foreign exchange exposure.

How did the stock open on Monday ?

 

[MoreLeverage]

Most firms then allocate to customers based on FIFO - the firm has to have a written procedure in place.

Mine isn't like that, but yes, the brokerage can do either FIFO or some type of random (whatever they decided as their policy).

You mentioned nothing unusual in the after hours which would always be first expectation. The second, often surprisingly, is foreign exchange exposure.

Interesting, thanks.

How did the stock open on Monday ?

You don't think it went in my favor if I care this much? The stock was down a little premarket where I failed to cover, and then ran up a lot. I was short bias for my view so I just held my short and luckily I wasn't bought in before the stock came back down.

 

[ET180]

A much less frequent occurrence is the call holder who just wants the stock to own or to cover an existing short position.

I'll frequently hedge a short ITM call by shorting ITM puts. There are also times when I'm short a put or call at expiration when the option expired ATM and I want to get assigned to either cancel out another position or to acquire shares. I wish the OCC had a way for traders who are short ATM options to indicate that they want to get assigned. Obviously, one can't assume that one will get assigned, but it would make sense to assign those traders who want to get assigned first before randomly assigning people who might not want to get assigned.

 

[MoreLeverage]

Thank you to everyone who responded. I never did figure out how or why this happened, but with the recent market down, I've been happy to hold my short position even if it didn't go my way initially after the assignment.

 

[prc117f]

i recent sold some calls that expired exactly at the money and ended up getting fully assigned on them, which I am told is unusual when there is no news or after hours move in the underlying stock. I wanted to know if this was just bad luck, or if many of those contracts were voluntarily exercised despite not being ITM. However, I had no luck getting my broker to disclose any details of the particular lottery used (i.e. the odds or % of client contracts subject to assignment), only their general policies.

Do brokers usually provide any details of an assignment lottery upon request?

Shit you should be celebrating. if you got assigned and expired right ATM you got maximum squeeze out of that trade. Never assume anything with options you have to close out your position if you want to exit your obligations.