Thanks for the low interest rate for years, it forcing me to do trading. I have been doing option trading for 1.5 years. I usually do selling covered put and covered call. The first year got profit then the last few months get wiped out, ended lost for 2022 Tax season. This year I have been trying different strategy which is safer but less profit. Lastweek, I tried a credit spread. I sell to open call AMD @ $81 2 contracts. I buy to open call AMD @ $82 2 contracts. And on Friday AMD was $81.52. I did not close the options because I want to know what happen if I don't close them. On Saturday I got msg The $82 call was expired and the $81 was assigned. I thought my broker will close the $81 and debit 200x$0.52 from my account. Then something bizzare (for me) happened. I have -200 AMD in my account! Never have that before. So basically I am become a short seller :) I tried to "Buy to cover" on Monday and it was not success. Then I set up a Buy order during after hour 100 AMD share for $80.80 Then today I set up "Buy to cover" 100 shares for $80.90 Then the price went down to $80.78 Now I ended up with: 100 AMD Stocks and -100 AMD Stocks. And it says "Short vs Box" I goggle it And understand it. My question is: When we become a short seller, In my case I have -200 AMD shares for Sat,Sun,Mon (3 days) do I have to pay interest on it? How can I cover the short 100 with 100 I just bought? What should I do? No button to click. Will my broker cover it automatically?


1 Answer 1


For the most part, options that expire in-the-money (ITM) are automatically exercised by the OCC. Since your short $81 call was ITM, you were assigned and you ended up with a short position in the stock. Your long $82 call was OTM at expiration so it expired worthless.

You pay a borrow fee for every day that you are short a security. It varies from next to nothing to 100s of percent. For AMD, my broker is charging 0.25% (per year) today. It accrues daily.

If the stock/ETF pays a dividend and you are short on the ex-dividend date, you pay the dividend to the lender of your shares.

When you buy shares to cover the short position, your broker should automatically net out the positions.

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