ok peoples, I have a questions that I wasn't able to get answered elsewhere, so ill give it a shot here.
Say I have 10,000 CALLS for NOV 100, and the stock price is 150 at expiry (third Friday).
I stand to make 10,000 x 50 = 500,000 (minus say the small CALL fees say i paid .50 cents each and commissions).
So, if I can't find a buyer on expiry for a good price, these options will automatically be exercised at expiry in November since they are in the money by .05 cents.
Now, heres my question. Say my account only has 50k cash position, I stand to profit ~500,000 for the 10,000 shares at 50 bucks below price, but how will the options exchange handle this exactly? I mean, to actually purchase 10,000 shares at 150, that will cost me 1,500,000, then I can sell them immediately, but how will my account and broker handle this?
Ok, thanks if anyone knows how this situation works! So, in summary you let options expire that are in the money and are automatically exercised, but your account doesn't have funds to pay for actual shares totaling.
Say I have 10,000 CALLS for NOV 100, and the stock price is 150 at expiry (third Friday).
I stand to make 10,000 x 50 = 500,000 (minus say the small CALL fees say i paid .50 cents each and commissions).
So, if I can't find a buyer on expiry for a good price, these options will automatically be exercised at expiry in November since they are in the money by .05 cents.
Now, heres my question. Say my account only has 50k cash position, I stand to profit ~500,000 for the 10,000 shares at 50 bucks below price, but how will the options exchange handle this exactly? I mean, to actually purchase 10,000 shares at 150, that will cost me 1,500,000, then I can sell them immediately, but how will my account and broker handle this?
Ok, thanks if anyone knows how this situation works! So, in summary you let options expire that are in the money and are automatically exercised, but your account doesn't have funds to pay for actual shares totaling.
