Questions tagged [options-assignment]

Assignment is the designation by a clearinghouse requiring that an option writer buy (in the case of a short put) or sell (in the case of a short call) the underlying futures contract or security when an option has been exercised.

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Buying Options on non tradable ETFs

Let's assume retail investor A is based in Europe and is therefore not eligible to buy non-PRIIPs regulation compliant ETFs (i.e. ETFs with missing KIID), however, he can buy options on these ETFs (I ...
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What to do with a call I sold

I own 300 shares of NCLH, I sold a call last Monday with strike price of $16 when the stock was at $15.8 for a premium of $115 (for the 3 calls). The Call expires tomorrow and I don't know what I have ...
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Is an ITM option bought/sold to close in addition to being assigned?

I'm a little unclear on what happens to in-the-money options on expiration. I know the option will get assigned, but does it also need to be bought/sold to close? For example, say I sell a covered ...
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Why are so few options ever actually exercised?

What is the reason that only a minor percentage of options get exercised (17%, I read on the OIC website)? If on expiration, the option is in the money, it will be either automatically exercised, or ...
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How do settlement times and Reg T work for options exercise and assignment in a cash account?

If I have a position in a standard PM-settled equity/ETF option in a cash account, are buys and sells of the underlying due to exercise or assignment treated the same as any other stock buys and sells ...
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145 views

Is it necessary to have 100 x strike price in cash or margin before entering a naked call credit spread?

Context I have no background in Finance but I have many years experience in investing in equities for my personal portfolio so I have a basic understanding I have never traded options I'm keen to ...
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116 views

Is a credit larger than the spread width bad in a credit spread?

I’ve been pondering this question since looking a put options for MCD today where I found two options for a credit spread that resulted in a credit $0.01 higher than the width of the spread. I was ...
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3k views

What are my risks of early assignment?

I have started writing covered puts and calls recently. Everything I read talks about the risk of early assignment of your position, but I don't really understand how often this happens. It seems that ...
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When does an option assignment actually get fulfilled?

I had 2 iron butterflies in RSX, expiring Jan 20th 2020. My short legs were at $25 strike, and the long legs were at $22 and $26. Over the weekend, I was notified that my short call ($25) was ...
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479 views

does naked call option assignment result in stock borrowing fees?

If I write a naked call option which gets exercised early, will I have a chance to purchase the stock to cover the call or will I already owe a stock borrow fee by the time I am notified of the ...
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534 views

Does dividends lead to early assignment of put option, or just call option

Is it correct to say that I risk early assignment only when I am short calls, not short puts? Because the option owner will want to buy stock to capture the dividend, he can only buy it by exercising ...
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256 views

Who (owner/ writer)needs to pay the option assignment fees

When an option is exercised, there is an option assignment fee that needs to be paid to the (broker/clearing house)? So if the options expire worthless, this fee need not be paid. But in the case ...
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310 views

Option settlement for calendar spreads

Hypothetical: let's say it's Jan 17, 2015 and AAPL is at 100. My portfolio contains: Long 1 Jan 23, 2017 Call Option for AAPL at 60 Short 1 Jan 17, 2015 Call Option for AAPL at 90 20,000 USD cash ...
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Can I get an assignment notice as soon as I sell a covered call

If I sell an American style ITM covered call, then in theory, can I get an assignment notice as soon as I have sold the call, since the counterparty can opt for early exercise? Does this ever happen ...
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How can the writer of an option cancel or reverse the position & obligation before exercise or expiration?

How can the writer of, say, a call option cancel or reverse the position and its obligation (to deliver shares) before the option is exercised or the expiration date reached? Can an option that has ...
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Buying & Selling Call Options

So, I understand that if I write a call option and someone decides to exercise it before it expires, I agree to sell them the stock for the listed price on the option. I guess my confusion is, if I ...
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190 views

How do straddles that involve selling options protect against early assignment?

When doing a covered straddle in options trading, it involves selling put and call options when entering the straddle. But there is no way of guaranteeing that your options won't be assigned before ...
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Brokerage Fees for Covered Call Options

I have been doing some research and am thinking of selling a Covered Call on a stock I currently own and am planning on holding long term. I would like to make an Out-of-the-Money Covered Call (OTM CC)...
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489 views

Does option delta predict expiration probability?

I've read that delta is a probability of option assignment. For example, if you have a put with a delta of -.70, there is a 70% chance the option will be assigned. If the delta is -.04, there is only ...
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566 views

How to record “short premium” in double-entry accounting? [closed]

I write (sell to open) puts on margin for “short premium” on my personal account. The contract note for an opening transaction lists a number of components: • contract number • option symbol • strike ...
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Covered calls: How to handle this trade?

I bought XNPT (Xenoport) a couple of weeks ago at 6.93 I turned right around and sold the Apr 16 call. $8.00 strike and collected 1.50 in premium. Today I get a great surprise that XNPT has rocketed ...
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209 views

Covered call and put options as separate trades

Let's say I write a covered call and a buy separate put option. After a period of time, the call expires, leaving me with the underlying stock. Thereafter, the market price went down and I can ...
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How are option contracts assigned?

If I'm short a call, and the contra exercises their option, how is that assignment tracked back to me? Is the other side of my contract tied to a specific buyer? How does the OCC know to assign my ...
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254 views

Odds of early assignment for a short in the money call

If I am short an in the money call, and a dividend is coming up, then should I just close it out at a loss to avoid early assignment? Or should I wait and see if I actually get early assigned? What ...
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1k views

What happens when the short leg of a credit put spread is assigned, but there is not enough liquidity to close the long leg?

My guess is that, if there is time left in the options the broker will wait, but if not, then the long put will expire worthless, and the trader will simply end up long the shares. If that's the case, ...
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999 views

Do I just let an options conversion/reversal trade go to expiration?

Let us say I lock in a small riskless profit using a conversion. Which means (as an example), I sell a call, buy a put and buy stock, and net a credit of .20. What do I do next? Do I just let the ...
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114 views

When buying a call option, is the financial stability of the option writer relevant?

A call option allows a person to buy a stock at some future date for a specified price. By implication, if it is "in the money" you'll be able to buy the stock at a potentially deep discount. So it ...
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11k views

Difference between European and American options

Appreciate some help with a problem i am facing OK, so first I found a put and call option with same strike price and maturity for both American-style and European-style options. I selected the ones ...
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364 views

What is the probabiltiy of being assigned if the call expires in the money

If I sell a call option and at expiry, the call is in the money, is it guaranteed that I will be assigned and will need to deliver the underlying? What is the probability of assignment/ My question ...
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1answer
70 views

Selling the underlying in case a covered call is exercised?

If I sell an out-of-the-money covered call and the option becomes in-the-money prior to expiry, then am I forced to sell my underlying at the strike price (assuming the counterparty decides to ...
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616 views

How does the process of “assignment” work for in-the-money Options?

Consider the following scenario - I have a covered call for XYZ for this month's expiration as XYZ May 18 25 Call. On May 18, XYZ is trading for $28, with the option listed above at $3.3. If I ...
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4answers
1k views

Covered call when stock position is at a loss

when writing covered calls and the stock value decreases. Sure your calls decrease to $0 and expire worthless (the desired scenario) but your stock position can continue taking a greater loss. so ...
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1k views

Do investors go long option contracts when they cannot cover the exercise of the options?

Consider I want to buy some american-style call options for a particular stock, and suppose this underlying stock 'XYZ' is valued at $100 a share. Suppose I go long (buy) 10 option contracts for XYZ ...
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4k views

What are the odds of being assigned for a long dated in-the-money call option?

If I sell a 2-year future dated call option that is slightly in the money (For example if Citi today is $5.13, I sell a call option for strike price $5.00 at Jan 2013 - today is Jan 2011), what are ...