urgent - What am I missing on this spread??

If the stock is not hard to borrow but impossible to borrow you will definitely be exercised on those calls. Then you could be subject to automatic buy in on the short stock by your broker. And there is not guarantee what price you will get. Also the assignment fees might be high too. When the stock is impossible to borrow like GM was right before bankruptcy you will notice that the calls will definitely trade below parity. I like FSU's idea of selling the .50 put spread for as close to .50 as possible then you almost get a free look at the 1 call strike with limited upside. Also check out the open interest in the sep and oct .50 call strike. Much lower than the other call strikes and put strikes which means people are buying the calls below parity and exercising them then selling the stock immediately.
 
Thanks everyone for all of your comments. I ended up doing nothing but sitting on my hands. I dont why I did not think of the hard to borrow factor. At one point, the net premium pocketed from opening up the three positions/spread I inquired about got up to a whopping .59. Presently at this moment it has calmed down, now only yielding .53.

Premium this AM on Sep .50 puts is sky rocketing. I was tempted to sell them outright, but it just seems too obvious at this point as to where this is going. That big share holder meeting on the expiration Friday will be very interesting to say the least.
 
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