Sell Puts and after hours

My assumption was he was short. Yes, your words were more to the point. The question as I read it was, if I'm short a put that closes ITM at expiration, am I "guaranteed" to be put the shares. My answer was no. I gave a situation as to why someone long the put or call, ITM or OTM can decide to exercise or not with either condition. They have the choice as they own the right. The sell has no choice. There are also situation where the buy can't exercise and the broker makes that decision for the customer. One example is in a cash account. You can't be short. If the customer does not sell the put before expiration and it is ITM, the broker will likely file an exception. The same is true for what would be a very large stock position vs their equity. An example would be a $50,000 account long 100 OTM SPY options that close ITM. No broker will allow that customer to be long 10,000 shares of a stock trading at 490. Some sellers will not be assigned.

BMK said:
The response to your original post by Robert Morse indicates that he may have thought you bought a put option. But in fact you have just stated that you sold a put.
More...
 
S2007S said:
When a sell put is assigned is it a guarantee it a guarantee?


Yesterday I had 1 out of 3 sell puts assigned even though the other 2 fell below sell put price I had taken credit for.
More...

No it is NOT guaranteed. They pick from all of the sellers whose puts have the strike price below the market price to be assigned in a random order so there is a chance that even though your short put is itm, you still did not get assigned. Consider yourself luck if you did not get assigned.

S2007S said:
Can the after hour change in stock price change the possibility of the sell put being assigned?
More...

Yes. That's called the pin risk. That's why if you do not want to get assigned, you need to close your short position during the market's regular hours.
 
Robert Morse said:
My assumption was he was short. Yes, your words were more to the point. The question as I read it was, if I'm short a put that closes ITM at expiration, am I "guaranteed" to be put the shares. My answer was no. I gave a situation as to why someone long the put or call, ITM or OTM can decide to exercise or not with either condition. They have the choice as they own the right. The sell has no choice. There are also situation where the buy can't exercise and the broker makes that decision for the customer. One example is in a cash account. You can't be short. If the customer does not sell the put before expiration and it is ITM, the broker will likely file an exception. The same is true for what would be a very large stock position vs their equity. An example would be a $50,000 account long 100 OTM SPY options that close ITM. No broker will allow that customer to be long 10,000 shares of a stock trading at 490. Some sellers will not be assigned.
More...
 
Haywood said:
Does the call/put buyer's right to exercise expire at the market close? If not when?
More...

In most cases you can exercise after the close. Each broker has a cutoff time in their terms and conditions.
 
Robert Morse said:
My assumption was he was short. Yes, your words were more to the point. The question as I read it was, if I'm short a put that closes ITM at expiration, am I "guaranteed" to be put the shares. My answer was no. I gave a situation as to why someone long the put or call, ITM or OTM can decide to exercise or not with either condition. They have the choice as they own the right. The sell has no choice. There are also situation where the buy can't exercise and the broker makes that decision for the customer. One example is in a cash account. You can't be short. If the customer does not sell the put before expiration and it is ITM, the broker will likely file an exception. The same is true for what would be a very large stock position vs their equity. An example would be a $50,000 account long 100 OTM SPY options that close ITM. No broker will allow that customer to be long 10,000 shares of a stock trading at 490. Some sellers will not be assigned.
More...
Ot here... but if you have a minute, can you chime in on this with an expert opinion?
https://www.elitetrader.com/et/thre...h-expiring-options.378430/page-2#post-5930435
 
Robert Morse said:
Can you ask me a specific question? There was a lot there.
More...
The discussion was about this:

Say you have a $50 put on stock xyz, and at expiration on Friday, and the stock closes at $52.

At 4:01PM Friday, bad news comes out about the company and the stock drops to $40 in the after hours. Is that put now in the money with ability to be exercised (assuming enough buying power) as long as one makes arrangements with their broker before 5:30et? Or is settlement based on the closing price of the underlying at 4PM and the put contract is still worthless?

I think we cleared it up, as FSU has done this before... but that was the question.
 
The automatic assignment is based on the closing price of the primary exchange at 4pm est for stocks. You can, as the buy, for any number of reasons choose the do something different than the automated process. If it were OTM, you can submit an exception to exercise. If ITM, you can submit an exception to not exercise. There are too many reasons to post here of why you might decide either. The most common to exercise OTM options is the stock movements after 4pm. Every OCC Member firm has a cut off to give their team time to correctly submit these requests to the OCC. I think Wedbush requires before 5pm, so we require before 4:45pm.



vanzandt said:
The discussion was about this:

Say you have a $50 put on stock xyz, and at expiration on Friday, and the stock closes at $52.

At 4:01PM Friday, bad news comes out about the company and the stock drops to $40 in the after hours. Is that put now in the money with ability to be exercised (assuming enough buying power) as long as one makes arrangements with their broker before 5:30et? Or is settlement based on the closing price of the underlying at 4PM and the put contract is still worthless?

I think we cleared it up, as FSU has done this before... but that was the question.
More...
 
You must log in or register to reply here.
Back
Top