I guess you can. So I sold two strangles in the last hour of trading spy. strikes were picked based on my last hour trading strategy. 195.50/195 196/194.50 made credit of 0.3 approximately. So far Ive been doing this for 6 weeks. No lossss yet. So wish me luck guys! Spy closes at 195.45. and Now I find my 195.5 contract is exercised and I am short 100 spy shares @ 195.50 +0.09 (after comms). my plans to deal with this are: 1)Short back month put lower than strike. Use premium to long weekly calls, that would cover the break even. 2) just close the position monday. I know i opened a thread earlier that talked about trade 1. So, I guess this is how you'd get into that position and this is how I plan to get out of the position.
I you do this with SPX vs SPY, you won't have to be concerned with assignment. 10 SPY = 1 SPX so that and wider markets might be a concern.
What's to believe? You will end up with a short call should you short the lower strike put (short shares, short put = short call). So going long a higher strike call will result in a bear credit spread (short shares, short put, long call = bear credit spread (vertical)). Do you want thew result to be a short 195.50/197 (or whatever upside call you choose to buy) call spread? SPX is Euro-convention; so you can only be assigned a share position at expiration in SPX. Regardless, you are shorting such small prems that carrying the trade into the weekend is necessary. Truthfully, it's a really dumb idea to short $30 naked into the weekend.
well the trade technically shouldnt be carried into the weekend, since the options are OTM and the expiration was on sept 18. if im mistakeb, please correct me. the spy closed at 195.45, my short calls were 195.50, 196 and short put 194.50,195. all legged into in the last hour of trading. so they are all OTM. but ultimately someone decided to assign me the short shares.
The SPX assigns to cash, so there is no risk of a spot position come Monday. Buying the strangle back is going to cost you a four or five cents for the nearby. So $30 in prem. $4-$8 or more in comms. Another $4 to $8 to buy it in. So $14 net to take the risk? What happens if SPY were to open $2 higher (SPX +20 pts)? You're willing to risk 10x-15x the premium?
yeah i know the after hours went up. i cant really buy the strangle back at this point since the contracts are already expired. What intend to do is sell a put at 195 and buy a call at 197 for september 25.. i sold the strangles OTM thinking theyd expire worthless. my plan for being put shares, was to sell a put and buy a call ntm, 195,197 respectively. current credit for that is 0.18. If that executes, i dont think there is any risk of loss, other than opportunity cost and cost of interest over the next 7 days.
Your original intention wasn't to be short SPY. It all boils down to Mondays open. Best case scenario SPY opens down on Monday - below $195.50. You obviously don't want the SPY to gap up on Monday.