Borrow appeared briefly at IB yesterday, now gone. Probability of assignment high, if not already. Why would holders, hold? Sucks being OI. Many have been in messes of our own making. No free money, eh? Hopefully, lessons learned. 15/40 was too wide. Short call was problematic from the start. You got the credit because of the box structure and borrow. But survival of the wide box isn't likely. Sizing is important. Flexibility is important. Looking at scenarios. What can go wrong. Borrow costs may have been surprising, but at least considered. And had the borrow eased, early assignment would still be a factor with either puts and/or calls. Of course, at least the box would be profitable in that scenario.
Yeah, definitely learned my lesson. Fwiw, got back about $1.50/share when the borrow came down and closed out 4 contracts. It might actually be better to wait to get assigned, saves me the wide spread on the 15 calls.
Yeah, thanks for posting that. It's a pretty interesting example. I'm sure I've been there, done that. It sounds like you got a better handle on the trade now. Just gotta manage any assignment.
I do not understand why did you make it so wide? especially if you could not handle it reaching up there? It seems pointless to do so if you cannot handle to position hitting 40 for example.
It was a mistake. It wouldn't be a problem except UNXL is hard to borrow, and the borrow got worse. Of course, HTB was the only reason I could put the box on for a credit anyway... so like I said, noob mistake. Needed wide strikes to make it a credit.
You may as well be typing cyrillic as the joker has no concept of the risks associated with a box in a single-name. He just feels the need to comment as my dog feels the need to bark.
FWIW, these boxes exist all the time. I was looking at the USO 31.5/32 May box today, and saw about a .15 credit at mid. But just try to get mid. It looked pretty good until you think about costs. What do you suppose the probabililty is of this box making it to expiry? It straddled ATM. Whatever, look at costs. Not worth it.
I didn't get mine at mid, but I did better than the ask. The real problem is finding one where the stock is not HTB, and not going HTB through the life of the spread (hard to guarantee). That way, getting assigned just means you hold the short/long position til expiry. Problem here is holding an assigned short position is impossible because it's HTB and the float is tiny.