How are options assigned?

Discussion in 'Options' started by spinn, Mar 7, 2023.

  1. fnnwizard

    fnnwizard

    I thiink a few readers here are not comprehending the quoted question.

    He was put a stock (iow, our op had to pay 100, when it's trading at 96). He is asking what he can do to be the other side of the trade, which is buying the stock at $96 when it's trading at 100.

    The answer should be very obvious... buy the puts = pay the put premium. We have no idea who and when this other person who excercised, bought the 100 strike puts. But that person didn't just buy the stock for 96. S/he paid a premium also. Without knowing the price activity of the underlying and timeframe of the put purchase, one can not say if that was a profitable ordeal.
     
    #21     Mar 7, 2023
  2. TheDawn

    TheDawn

    That's another possibility. I think estate laws require all security positions to be liquidated then in that case, the option would've been sold. I am not sure exercising an option would qualify as "liquidation" though.
     
    Last edited: Mar 7, 2023
    #22     Mar 7, 2023
  3. TheDawn

    TheDawn

    No the OP is saying he bought the stock at $96

    So the OP didn't make a loss of $4; he was actually making an unrealized profit of $4. So to be on the other side of the transaction, he could've just sold the stock that he bought via assignment $96 for $100 making an easy $4 profit. LOL
     
    #23     Mar 7, 2023
  4. Overnight

    Overnight

    I think I understand what the OP is getting at. He is basically wanting to revenge trade the option assignment.

    He was forced to buy the stock at 100 when the price was at 96. Now he wants to be the opposite, and force someone else to buy his $100 shares while the price is at 96, to get back his $4 loss. And I think he want to do it with an opposite option position. So...Buy a $96 call and hope the price gets back to $100? I dunno', you options folks are crazy.
     
    #24     Mar 7, 2023
  5. TheDawn

    TheDawn

    That's not what he said. I think he got assigned on an option that's OTM. I think he's confused the strike price on his options with "current price". The strike price on his option is $96.

    If he was really put the stock at a loss at $100 when the stock was trading at $96, to reverse the loss, then yeah he could just buy a call with a $96 strike and then sell the call directly cuz if the option has some extrinsic value, then he would get more from selling the option than exercising the call but he would have to wait to sell though in order to recover the premium that he's paid. That's why I asked for him to show us a screenshot of his assignment history to see what was the strike price.

    Not as crazy as you futures people with your carrying charges, forced closing, the weird units of contracts and the actual delivery of the physical stuff... LOL
     
    Last edited: Mar 7, 2023
    #25     Mar 7, 2023
  6. Overnight

    Overnight

    FU dude, we're normal. WE DON'T ACTUALLY TAKE DELIVERY OF OIL AND GOLD! We cannot afford the storage costs, hehe.
     
    #26     Mar 7, 2023
  7. Cabin111

    Cabin111

    I still have 10,000 pounds of pork belly here in my back yard!! I don't know what to do with them...
     
    #27     Mar 7, 2023
  8. Overnight

    Overnight

    Cabin's Bacon Cabana (The CBC). All you can eat for 10 bux. Free shooters!
     
    #28     Mar 7, 2023
  9. TheDawn

    TheDawn

    CHICKEN!!! I guess you don't have any options. LOL :p
     
    #29     Mar 7, 2023
  10. Overnight

    Overnight

    We also do not take delivery of cows, since you went into the meat space. We're not packer/processors. We trade the meats, but we do not have the meats, like Arbys, heh.

    There are options on most futures, but FOPs on things like meat are so thin it would make your scalp fly away from your head. Pointless.
     
    #30     Mar 8, 2023