At 1300 you won’t be assigned shares so when the stock rallied to 1800, you will owe someone 1000 shares at 1800.
Yes, that is the risk: a steep reversal without assignment. A mitigation is shortening the expiry date.
You don't yet know what you don't know. You're concocting complex scenarios on paper, without the value of experience. The only way to learn is by doing.
The only mitigation is to buy back the option at more elevated IVs or sell the underlying as a hedge. You can't trigger early exercise as a seller. Note that this is just one far away scenario, they have a tendency of happening when you repeatedly execute a strategy over several iterations. I believe in the top down framework view that you have. That an option strategy can enhance your asset allocation's equity exposure. PIMCO StocksPlus comes to mind. However, the magic of options is to use multiple option strategies in combination to produce a portfolio of options that together produce return distributions and variance characteristics better than simply owning a single asset or issue. It is why we use options in the first place.
Can you find anything else wrong in my GOOG example? I do not care one bit about IV, greeks or vol (honestly). Plenty of people here do. I may add that a lot of people sound sophisticated, when they actually have no clue! (and I have a PhD. in econometric so moderately qualified to make such a statement). I use options instead of limit orders, that's it.
An I may add that I actually know how to make money as well. So please, park any advice that does not relate to my questions on the side for now.
There is nothing wrong with your example. However, the scenario was needlessly complex which did not help to prove any point. So, we know that a pop in IV can create an intermediate period that produces an out-sized loss which goes beyond the narrow model of expiry value. I brought up an example scenario not to criticise you, but to open your eyes to a common experience. As someone has already mentioned, you need to experience it. My mistake for giving you a preview. If you think the previous comments were an attack on your intellect, you have been way off the mark.
Not so much offense as annoyance. And that was not particularly directed at you! Look I post a specific question to be told "no" and "zero" or "you don't know what you are doing" when I am looking for more experienced to give their opinion on my case only (as I do whenever I see a situation where I can help). Now it is possibly asking a lot from an anonymous forum. I should possibly looking at paying a small fee to an options advisor/consultant instead if I find one.