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2

In the US, if an option is one cent or more in-the-money (ITM) at expiration, the Option Clearing Corp (OCC) will automatically exercise options whether they are long or short. This is called Exercise by Exception. For equity options, you will end up with a long or short position in the underlying (index options are cash settled). If you are long the option,...


2

The option will certainly be exercised. The $10 cost is already lost to buy the option. Now the person who bought the option has the right to sell an $85 stock to you for $90. They'll certainly do that. That will allow them to make back part of the fee they paid for the option, so they'll end up down just $5 instead of the full $10.


1

The broker will let you make this trade, although probably not allow you to sell the 151 call after you buy the spread. The systems are smart enough to know that the 151 call is protecting you from infinite potential losses. You should never need to "exercise" this spread, or be forced to buy any stock. Just close out the spread on expiration day or sooner. ...


-2

Usually people call at loss because they expect to make a gain when the value of the stock goes down...


13

A major principle of decision-making is that one should compare an option to other options you currently have. Much angst and suboptimal behavior is caused by people instead making their decisions based on comparing an option they have to an option they don't have (just in case it's not clear, I mean "option" as in "a possible course of action", not "stock ...


44

The price at which you sold the option, or at which someone else bought it, has no bearing on exercise. Someone holding a long option to expiration will exercise it if it's in the money, which this one was. The person exercising it was likely not the same person who bought it from you at $2.55, but even if it was, the fact that they had a loss is irrelevant....


28

You do not understand the fundamentals of options. This option assignment and loss of your stock is the result of that. With all due respect, get a good options book and spend some time with it. An in-the-money has intrinsic value. At expiration it is the price of the stock less the strike price. IOW, your call was worth 55 cents. Not exercising meant ...


2

First, a small terminology correction. You don't buy a naked call. That's an outdated form of description from decades ago. A naked call is a short call that is not covered by long stock or a long call. Your broker allows such trades because the margin requirement (the risk) is the difference in strikes less the premium received. My broker ...


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