Simple question regarding unloading Verticals

[zxd]

Hello,

Simple question: I have a vertical on a stock by selling and buying puts...on OpEx, do I have to buy back the positions to realize it or will they expire by themselves (or cancel each other out?) Sorry if this is a dumb question.

 

[dagnyt]

Quote from zxd:

Hello,

Simple question: I have a vertical on a stock by selling and buying puts...on OpEx, do I have to buy back the positions to realize it or will they expire by themselves (or cancel each other out?) Sorry if this is a dumb question.

If both options are in the money when expiration arrives, they will cancel each other. But you will either pay or collect cash, depending on which puts you own.

If they both expire out of the money, then they will disappear.

If one expires in the money and the other out of the money, you want to close the position - or at least the one that is in the money before the market closes for trading on expiration day.

You may also trade the spread to close (sell your longs, buy your shorts) now or any time before expiration.

Mark