Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

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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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 the odds that I will be assigned in the next 60-90…
user2494
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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 been written be "cancelled", per se? Assuming not,…
Kyaden
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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 the option owner should exercise it to realize his…
Victor123
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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 you reach your target prices. So is that just…
Matt Phillips
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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 at a $100 strike, and the option itself is…
9b5b
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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 past 10.00. I fully expected my position to be…
Jane Wilkie
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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), which from my understanding limits my…
Greg Bray
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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 unwind my position, I will garner $28-$3.3 = $24.7…
rs79
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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 are the odds of early assignment for a deep in the…
Victor123
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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 buy a call option from someone else and then sell…
Senju
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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 specific contract?
Fueled By Coffee
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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, then the put spread carries the same risk as a…
alekop
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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 his call, not his put. So if I am naked puts, I…
Victor123
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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 How does settlement work? The in-the-money option…
John Shedletsky
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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 or do I get the assignment notice only upon…
Victor123
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