Can someone please explain something about the option spreads? How come this broker is not exercising these short options in this video as they are deep in the money?
https://www.youtube.com/watch?v=0djdzr4Jsh0
I took a class where they warned that once your short position is in the money always be afraid of it getting exercised anytime. If you don't have a big enough account to cover the assigned shares you could lose a lot of money. So they said to consider closing the short position once it's in the money. It stuck in my mind and once my short call or put is in the money I always exit the trade even if it's a loss.
I know that there are still 4 days left for the expiration in these trades that John Carter is doing but still this could be millions of dollars of assignment, if it happens. Obviously if the broker or the trader on the other side is going to lose money then they won't exercise. Is there a clear formula or calculation I need to perform to see if an assignment will happen or not, the only ones I know for sure is the expiration or dividend day.
Thanks John