Short options at expiration?

Quote from spinn:

I cant disagree with that, but on the other hand nobody had the right answer...perhaps a few others should do more reading and less posting?
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You should not count on getting educated by asking a bunch of anonymous folk on the internet for educational advice. You might get interesting ideas or strategies on the forums but without a good educational foundation it would be a waste of effort.

The best thing to do is invest some money in some basic options education (ie books, OIC has plenty of free educational podcasts etc..)

http://www.optionseducation.org/

They offer a tremendous amount of great free educational materials and videos.

Start out with videos Essential concepts, Terminology and mechanics (1 &2) and go through the 112 video set and or pick and choose.

Seriously, It is for your best interest.
 
Quote from spinn:


to the guy who thinks im $10 in the money, I will sell it to you for $9....its 20 cents or so in the money, trust me.
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Trust you?

You have no idea how to use option terminology correctly.

The term 'in the money' has absolutely NOTHING to do with the your profit or loss. It has nothing to do with the premium you collected when selling the option.

The term in the money - for a call option - equals:

underlying price minus strike price.


There are no other definitions of that term.

If you have done this 500 times, why don't you know what you are doing?

Mark
 
There has been a lot of Spinn on this but here is the answer to what I believe you were asking Spinn:

You did in fact sell a DEC 102 SPY call. You are not nuts. These options expire THIS Thursday 12/31. Unlike most options that expire 3rd Friday of month. With Futures at 1119 as of the time of my post SPY will open at $112.27 leaving you .53 'in the black' or with a profit as of now.
Although there may very well be a few cents of premium in the call still so you won't get it right where the SPY is trading.

If you held til expiration, you don't have to do anything. Your account will show that you sold 100 shares at $102 but then the shares are simultaniously marked to market. The calls in account will show being bought at 102 in an exercise entry which makes up the difference. Be prepared to put up the additional margin though. If its 50% on shorts at IB then thats $5600 or so. I think it should be more like 25% for a short, but I can't remember. I don't trade retail. To avoid this just buy it back before expiration. Check with IB though because sometimes index 'type' options expire at the open of trading I believe, meaning you may have to buy it to cover on Wednesday.

p.s. - Now that I just looked the exp for these actually says 12/30 so I think this IS in fact the case. You will not be able to buy these on Thurs it appears.

Good luck! -T
 
Quote from spinn:

I cant disagree with that, but on the other hand nobody had the right answer...perhaps a few others should do more reading and less posting?
More...
LOL. Perhaps nobody had the right answer to the wrong question???
 
Quote from spinn:

What happens if you sell an option short and carry it past expiration. Does it just get closed at the price or do you end up short 100 shares of the underlying?
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If you have a short option that expires out of the money, nothing happens. If you have an in-the-money option position expiring, you will be assigned a short position (if a short call) or a long position (if a short put) at the strike price of the short option. You get to keep the premium received in any case. This scenario is assuming that the option/underlying is not cash settled.
 
thanks jw...i got confused becauase I forgot about the premium credited to me...I was not intending to short this so close to expiration, so I bought to cover with a small profit this morning.
 
Quote from spinn:

thanks jw...i got confused because I forgot about the premium credited to me...I was not intending to short this so close to expiration, so I bought to cover with a small profit this morning.
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Glad you found a way to manage your trade. Always remember that the premium received gives you some leeway. In reality. it gives you less breathing room that you think. I am sure you noticed that you had to pay back some time value as well as intrinsic value.
 
Quote from spinn:

I sold a $102 SPY call near the close yesterday for about $10.80

so I am short that call; the underlying is about 30 cents in the money
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S&P was 1126 yesterday, and SPY would be about 112. I imagine you sold 102 ITM Jan 15 2010 call. You will be okay if S&P drops. Otherwise, you will lose or you will be exercised or both.
 
I exited that trade because I didnt want to be short 100 shares -$10,even if it would be cancelled out by the premium. I made about 40 cents on that trade.

I then shorted a jan 15 102 call at 10 am yesterday, that trade is now about $2 in the money (on the underlying) as the SPY dropped another 50 cents after hours.
 
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