I sold a couple January $13 SOXL puts naked and it is currently at $13 so I am in the money, or very close. My question is, what happens if I let these expire on Friday. Will I end up being long the stock at $13? I am ok with being long but do not want to end up short. Yes, I should know this.........
What happens when a short in the money put expires?
- Thread starter spinn
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Robert Morse
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I'm glad you are asking these questions, but it is in your best interest to understand this BEFORE entering the trade. If they are ITM, and if your short put is assigned, yes you will be long stock.
Easy way to remember: you've sold someone the right to put stock to you. On the other side, you've sold the right to have them call stock away from you.
You will end up owning SOXL, 100 shares for each put option you sold. If you do not want the shares, you have to buy the option you sold back before options expiration. Brokers will exercise any option, put or call that is $0.01 in the money by options expiration.
There MIGHT and just MIGHT be a chance you would not be assigned with an ITM option by expiration. Assignment is not guaranteed because option shorters with ITM options are assigned at random because not all option holders with ITM options elect to exercise them, majority of them close their ITM options instead of electing to exercise them so you might luck out. According to OCC, only 30% of options are exercised.
Oh for the love of God Dawn, don't conflate the percentages. Only ~30% of options are exercised because the other 70% expire worthless; not because people refrain from exercising them!
If the option is ITM at expiration, even by 1¢, it is a near certitude it will be assigned to the short seller.
I took the tasty trade beginner option course. Really well put, no pun intended
Yes you will be long but I would not be holding on to this because
"No, SOXL is not designed as a long-term buy and hold investment.
SOXL is a short-term trading vehicle meant to be bought and sold intraday. It is often used by financial advisers and professionals, in particular those who understand leverage and its potential gain and loss impacts."
Basically you will loose money in the long term
Both Destriero and BWS answered the question efficiently and with no fluff. You come in here and try to over complicate the issue by responding with an answer outside of the frame of the question.
This thread should be closed, so the OP is not poisoned by any more opinions about why the instrument is "Bad to hold long-term". The FACK you know what the hell is good as a long term hold.
For fracks's sake.