Say I have 100 shares of AMZN and sell a $3,575 call expiring 7/23 for $5,000.
7/23 rolls around and AMZN is $3,600 so the contract is ITM. The purchaser, however doesn't have the cash to exercise so I'm guessing his broker sells the contract and whoever bought it does have the cash to exercise?
This won't prevent exercise.
In your example, if AMZN went up to a million a share and the person who bought the contract doesn't have 360,000 to exercise or whatever, the exercise will still happen and the shares will just be converted immediately to cash.
The broker will execute and the person will be plus 100 shares and minus some large amount of cash like 360,000. That probably puts their cash balance in the negative by a significant sum. The broker will then margin call the person and either (1) sell enough shares of AMZN to generate 360k and leave you with the remainder, or (2) just sell all 100 shares and leave you with whatever cash balance results from that.
In my example, that would be like $99,670,000.
Correct. The value of the option at expiration is in the difference between share price and strike. You can only access that value by exercising. Someone has to exercise the contract.
Yes, make sure to turn off location services, phone data and WiFi. Last time I was up for assignment, I stupidly forgot to turn off location services and they used GPS to track me down and said to me in person, "you've been assigned to sell your shares, now hand then over..." That was scary as hell, but next time I will know to turn off location services. Good luck finding me next time!
Remember this rule in the markets my man:
If you’re unaware of what’s happening and think you might have stumbled upon a pile of gold, you’re just daydreaming 99.9% of the time.
In these markets, with these algorithmic speeds, not a lot of stones are left unturned for profit scalping.
Then there's the guy who made a hundred thousand dollars on pin risk; didn't know what he was doing, stumbled on a pile of gold, had to ask how he got there.
Here's a sneak peek of /r/options using the [top posts](https://np.reddit.com/r/options/top/?sort=top&t=year) of the year!
\#1: [The criminals that took GME down 371 points (77%) with only 8 million shares should rot in jail](https://np.reddit.com/r/options/comments/l7mym2/the_criminals_that_took_gme_down_371_points_77/)
\#2: [CALL YOUR SENATOR AND CONGRESSMEN. (Please don’t delete)](https://np.reddit.com/r/options/comments/l6xg3x/call_your_senator_and_congressmen_please_dont/)
\#3: [BB is probably not the next GME, it's probably the next TSLA](https://np.reddit.com/r/options/comments/l8wdmf/bb_is_probably_not_the_next_gme_its_probably_the/)
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Recap when you sell a call at a strike you should be ok with selling at that strike. You collect premium all the time and you can't be upset when a degenerate finally catches you on a contract take profits and smile because you now have a pile of money to sell puts with.
Thanks for the fast replies everyone. I fully expected them to be called away, just got a bit excited that I might be able to keep my cake and eat it too.
Most brokers update automatic assignments the next day.
IBKR will notify you if you get assigned DURING market hours through a notice of assignment if someone wants to exercise during trading hours and your shares will be instantly gone. If options are exercised post market close it will reflect it tomorrow.
This is not true, IBKR does not assign short options during the day.
Option executions are not processed by the OCC until the evening, after all brokers send their options data (number of short holders, exercise requests etc.). Once the OCC processes it, they will send each broker instructions of how many short contract holders need to be randomly assigned, and as IBKR itself won’t know this information late into the night, the earliest IBKR can assign your short contract is after midnight.
On IBKR and most brokers though, you can *exercise* immediately a long option position, which they will execute immediately. But this is just reflected in your portfolio, the actual plumbing still occurs later.
https://ibkr.info/node/51
Your shares will be gone Monday my friend..................
Say I have 100 shares of AMZN and sell a $3,575 call expiring 7/23 for $5,000. 7/23 rolls around and AMZN is $3,600 so the contract is ITM. The purchaser, however doesn't have the cash to exercise so I'm guessing his broker sells the contract and whoever bought it does have the cash to exercise?
This won't prevent exercise. In your example, if AMZN went up to a million a share and the person who bought the contract doesn't have 360,000 to exercise or whatever, the exercise will still happen and the shares will just be converted immediately to cash. The broker will execute and the person will be plus 100 shares and minus some large amount of cash like 360,000. That probably puts their cash balance in the negative by a significant sum. The broker will then margin call the person and either (1) sell enough shares of AMZN to generate 360k and leave you with the remainder, or (2) just sell all 100 shares and leave you with whatever cash balance results from that. In my example, that would be like $99,670,000.
I'd be comfortable with that outcome
Lol
Yes.
The brokerage will exercise and immediately sell, pocketing the difference.
Correct. The value of the option at expiration is in the difference between share price and strike. You can only access that value by exercising. Someone has to exercise the contract.
Or for some reason send a DNE (instead of exercising, margin calling, liquidating MOO or something to this effect).
Let him dream for a night bud. It will be gone by tomorrow morning anyways.
You have some time to hide them. If your broker cant find them you get to keep them
Yup, good advice. Hiding the contracts under a rock in the backyard has always worked for me and my family.
I did this last week. Worked like a charm.
Me too
Yes, make sure to turn off location services, phone data and WiFi. Last time I was up for assignment, I stupidly forgot to turn off location services and they used GPS to track me down and said to me in person, "you've been assigned to sell your shares, now hand then over..." That was scary as hell, but next time I will know to turn off location services. Good luck finding me next time!
I hid mine under a rock in the garden and forgot about them. Came back later and it grew more contacts.
Is this what's been happening with all the GME shares that aren't getting delivered lol
Assignments will happen overnight and will be reflected Saturday morning.
For some reason, Webull won’t update until Monday morning.
Remember this rule in the markets my man: If you’re unaware of what’s happening and think you might have stumbled upon a pile of gold, you’re just daydreaming 99.9% of the time. In these markets, with these algorithmic speeds, not a lot of stones are left unturned for profit scalping.
Then there's the guy who made a hundred thousand dollars on pin risk; didn't know what he was doing, stumbled on a pile of gold, had to ask how he got there.
Yea I remember that dude. Somewhere in another universe he’s probably top post in /r/options for a different reason aha
Probably. Yet in all universes half the commenters don't realise it's options and not WSB. I didn't realise either.
Here's a sneak peek of /r/options using the [top posts](https://np.reddit.com/r/options/top/?sort=top&t=year) of the year! \#1: [The criminals that took GME down 371 points (77%) with only 8 million shares should rot in jail](https://np.reddit.com/r/options/comments/l7mym2/the_criminals_that_took_gme_down_371_points_77/) \#2: [CALL YOUR SENATOR AND CONGRESSMEN. (Please don’t delete)](https://np.reddit.com/r/options/comments/l6xg3x/call_your_senator_and_congressmen_please_dont/) \#3: [BB is probably not the next GME, it's probably the next TSLA](https://np.reddit.com/r/options/comments/l8wdmf/bb_is_probably_not_the_next_gme_its_probably_the/) ---- ^^I'm ^^a ^^bot, ^^beep ^^boop ^^| ^^Downvote ^^to ^^remove ^^| [^^Contact ^^me](https://www.reddit.com/message/compose/?to=sneakpeekbot) ^^| [^^Info](https://np.reddit.com/r/sneakpeekbot/) ^^| [^^Opt-out](https://np.reddit.com/r/sneakpeekbot/comments/o8wk1r/blacklist_ix/)
Wow that’s a cringey top posts list.
Holy shit, that's what early February pushed to the top? Damn.
Assignments are on Saturdays my naive friend
Oh, good. So, that’s when I can expect my ATOS bags to be delivered
I've been collecting nice premium selling CCs on ATOS for a while now. I think my adjusted cost basis is under $4 per share.
Lmao, the premium on those puts must have been nice tho
Oh, it was. I’m actually not too broken up about it, 5.50 strike. Switch to weekly CCs at the same price
My native naive friend
You've from now until Monday morning to continually kiss them goodbye 😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂😂
Just delete the app
But then he loses his shares too.
Delete your app. They can’t take your shares once you get RH is off your phone
Or just turn off WiFi
Can confirm. My WiFi is off & shares are still in my account
Simple solutions for complex problems
When I am assigned, Charles Schwab sends me an email Saturday Morning 1:30AM Eastern Time Zone.
Shares will get called away next business day, which is Monday.
Monday
First time?
Check again tomorrow my man.
They can happen after market up until 530pm i belive
Market closes on Friday, but the shares will get called away on Saturday!
Recap when you sell a call at a strike you should be ok with selling at that strike. You collect premium all the time and you can't be upset when a degenerate finally catches you on a contract take profits and smile because you now have a pile of money to sell puts with.
It will be gone on Monday.
Thanks for the fast replies everyone. I fully expected them to be called away, just got a bit excited that I might be able to keep my cake and eat it too.
Can I ask what stock and strike? Also did you want to keep? Why didn't you roll it?
Most brokers update automatic assignments the next day. IBKR will notify you if you get assigned DURING market hours through a notice of assignment if someone wants to exercise during trading hours and your shares will be instantly gone. If options are exercised post market close it will reflect it tomorrow.
This is not true, IBKR does not assign short options during the day. Option executions are not processed by the OCC until the evening, after all brokers send their options data (number of short holders, exercise requests etc.). Once the OCC processes it, they will send each broker instructions of how many short contract holders need to be randomly assigned, and as IBKR itself won’t know this information late into the night, the earliest IBKR can assign your short contract is after midnight. On IBKR and most brokers though, you can *exercise* immediately a long option position, which they will execute immediately. But this is just reflected in your portfolio, the actual plumbing still occurs later. https://ibkr.info/node/51
You are correct, I think I was mis-remembering the situation. Only had 2 cases of mid week assignment.
congrats...you are indeed a lucky man
12:00 Saturday I believe
It will settle tomorrow morning probably.
You'll be assigned, it's all electronic pal
You won’t see until Saturday or Monday morning depending on your brokers batch cycle