No. It means you are +1 option at your short strike, net of your original position. If your original position was -1, your current net is [-1 + +1] = 0. If you held a -6 position, it is now -5. It depends on the contract. Look at the specs for each expiry and find whether it is European or American, and whether it finishes in cash or in the underlying. (The ES, BTW, does both.) The math [mkt - strike]*multiplier remains the same. It is good practice to know this stuff before each spread gets written, as in a fast-moving market, you can slip from one expiry to another, not realizing that exercise structure has changed, and "Ooops." is rarely a good thing to hear after a bunch of trades has been done.
You want your short call to be well in the money when you get close to expiry. The spread at that point will be close to the max and you can exit earlier. On a ten point spread you should be close to 9 points if it's well the money. I would close out then in the last few days depending on how the market and the stock was performing
I'm seeing "Option exercise results in a position in the underlying cash-settled futures contract." for all weekly ES options (and all other ES options), including Week 3? (https://www.cmegroup.com/trading/eq...html?optionProductId=136#optionProductId=2915)
I stand corrected. Probably I was thinking of Quarterly options which settle into SOQ at the end of each quarter. https://www.cmegroup.com/trading/eq...html?optionProductId=2915#optionProductId=138 "Option exercise results in a position in the underlying cash-settled futures contract. In-the-money options, in the absence of contrarian instructions delivered to the Clearing House by 8:00 p.m. ET on the day of expiration, are automatically exercised into expiring cash-settled futures, which settle to the SOQ calculated the morning of the 3rd Friday of the contract month."
I was actually hoping you were right, the SOQ thing doesn't work for what I specifically need to do and for some esoteric reasons would prefer ES to SPX weekly options which are what I have to use now.
Given that I've clearly indicated I'm looking for a cash settled option on not only the S&P 500 but specifically ES, suggesting a stock settled option on a Nasdaq-100 ETF is singularly unhelpful!