Assignment question

Discussion in 'Trading' started by misterkel, Nov 20, 2020.

  1. I had a couple of short options end the day (expiring today) right at the money - literally on the penny. How does that sort itself out? Will it normally be exercised based on closing price or after hours price (nothing might happen there, it's not super liquid).
    It was a spread, so I'll be long the shares after I exercise. The assignment would net me back to zero, which I want).
    Should I short the shares after hours? I'm a bit concerned about a big move on Monday. Need an answer asap, because of market closing. thanks.
     
  2. if the short leg was ITM by 0.01 (OCC rules) then you will likely be Assigned. This happens at official closing price (day session). Short calls and you will be short 100 shares/cntrct if you do not own the shares. Short puts and you buy the stock at the strike. If your long leg is not ITM then you will not be auto-exercised.

    If for some reason there is news after the RTH close that would move the stock in favor of the short option holder, then they may Exercise during after hours and you will be Assigned even if the stock was not ITM during regular trading hours.
     
    Last edited: Nov 20, 2020

  3. Cool. thanks.