I am fairly new to options and I am trying to understand how an assignment to part of a spread would affect p/l. Using a short put butterfly as an example using GOOG
500 2.75/-1
510 7.55/+2
520 15.60/-1
total credit is 3.25 or $325 stock is at 505.35
now lets say a few days later the 520 put is assigned early.
500 8.25
510 18.00
520 27.95
the trade at this point is up $305 and the stock is at 492.01. Now lets say that I were to exercise the 510 puts to cover the 520 assignment and decide to exit the rest of the trade (sell the remaining 510 long and buy back the 500).
I calculated the trade to be down $505, is this correct?
500 2.75/-1
510 7.55/+2
520 15.60/-1
total credit is 3.25 or $325 stock is at 505.35
now lets say a few days later the 520 put is assigned early.
500 8.25
510 18.00
520 27.95
the trade at this point is up $305 and the stock is at 492.01. Now lets say that I were to exercise the 510 puts to cover the 520 assignment and decide to exit the rest of the trade (sell the remaining 510 long and buy back the 500).
I calculated the trade to be down $505, is this correct?