Well the assignments and the whole thing happened because of dividends so it's kinda hard not make it as a dividend thing. And your comments are the ones who inspired me to make it as dividends actually: Regardless when you exercise the call, there is no dividends. The whole issue is trying to recuperate as much money as possible and at the same time make sure to cover the shorts. That's how I am approaching it. And you think my way is over-complicating thing? What's with your puts? And the long carry and etc. That's not complicated? LOL Where did this put come from? Why is the put getting involved here? I never understood this calculating calls in terms of puts or whatever tbh. I have seen a few comments here on ET explaining it but I never understood it and never used it.
In Arnies long vertical, both legs were fairly DITM for Arnie to be assigned on the short call. My question to you is when should you exercise a call early??? Is it a dividend play?? What happens when you exercise?? To make it a little easier, assume you have no mo ey in your account, but can borrow from your broker to purchase the stock should you choose to exercise early.. Think about a synthetic call as well.. What do you have to purchase to keep the risk profile the same
Just in case anyone is wondering: I was short the HD Dec 6 395 Call, Long the 385. I was short the HD Dec 13 395 Call, Long the 380.
lol next time short the same put spreads. Short put spread + call spread = box. They are equivalent, but you won't have to ex your calls. Greeks!
Yes agreed In general, you exercise a call early when the (strike - purchase price of the call and the underlying ) + any other benefits like dividends is > (Selling price of the call - purchase price of the call) In Arnie's case, if he didn't short any calls, he should've exercised the long calls BEFORE the ex-dividend date to take advantage of the high dividend. Borrowing to buy stock = a synthetic call so there is no options really so there is no exercise here. I am confused here. I still don't know where does the put come into play.
Ok these are VDITM options. You are already short-squeezed. Ok you would have to exercise the long calls asap to cover the shorts and it's not even worth it to do the opposite of wheel strategy to keep selling puts (ok now I know where the puts come in LOL) while waiting for the stock price to come down from the current level to your assignment price. The sale price of the puts are so low right now because the stock price is so high and by the time when it comes down, you might as well buy the stock back instead of getting assigned on the puts to cut your profit short and that is if the price will come down. If by the 2 chances in the past 2 years that the price actually goes up after ex-dividend date, then you are going to be short-squeezed even further. I didn't know you are that deep itm with the short options. I thought the shorts are ITM but the strike is close to the stock price so you won't have to wait for long for the price to go down. Yeeks! Hopefully you break even with no loss.
it’s hard to understand options if you don’t want to understand the Greeks as the Greeks explain why things are happening to the options.