[ASK] Credit Spread with ITM on sell option

Discussion in 'Options' started by ANCOLL, Apr 10, 2007.

  1. MTE

    MTE

    It's all about the dividend payment, i.e. ex-dividend date. Always check ITM calls when the stock is about to go ex-div.

    And, yes, assigments happen overnight hence you don't find out about until the next day. This is where the whole early call exercise prior to ex-div and shorts being responsible for the dividend comes from.
     
    #11     Apr 10, 2007
  2. Funny thing my calls were NOT ITM at the time of assignment thats why I was so surprised but obviously close enough to the money that warrented assignment by someone.
     
    #12     Apr 10, 2007
  3. MTE

    MTE

    The maths behind early call exercise are pretty simple. If the dividend is more than the cost of carry to expiry plus the price of corresponding put then the call will be exercised.
     
    #13     Apr 10, 2007
  4. Tums

    Tums

    you better invest some time in option education.

    Looks like you have not got the basics down pad; you will have a hard time dealing with more advanced issues.

    This option game is complex, there are traps everywhere, so as opportunities, if you play it right.

    Here's one place you can start:
    http://www.iseoptions.com/education/webinar.aspx
     
    #14     Apr 10, 2007
  5. ANCOLL

    ANCOLL

    Thanks for the link, Turns
    I will come back after i learned it
    :)
     
    #15     Apr 10, 2007