Options Worst Nightmare
Biggest shocker was waking up to Assigned Option almost 17k ![]()
. Who ever said its Rare for early exercise of American style options. Sold a put option Yesterday that expires in June, Today other guy made me buy 100 of his $Apple(AAPL.US$ stocks. Although earned a bit $69 would be better if it plays out as planned in June.
An investor might exercise a put option early, before expiration, if the option is deep in the money and the time value of the option is less than the dividends expected to be paid on the underlying stock before expiration. This could happen if the stock price falls significantly below the strike price, making it profitable to sell at the strike price rather than waiting for potential time value gains. Additionally, early exercise may be driven by liquidity needs or a change in sentiment about the stock's future direction. However, early exercise for American-style options is generally less common since it forfeits any remaining time value.
To help explain the option position and what happened?
Sold a put option and received a premium of $30.50 per share. Since the option was assigned, bought 100 shares at the strike price of $200 per share. total cost for the shares is therefore $20,000 (100 shares x $200 per share).
You also have to account for the premium you received, which is $3,050 (100 shares x $30.50 premium per share).
The current value of your shares is $17,019 (100 shares x $170.19 current stock price).
To find out your profit or loss, you subtract the initial cost of the shares from their current value and add the premium received from selling the put:
Profit or Loss = (Current Value of Shares + Premium Received) - Cost of Shares
Profit or Loss = ($17,019 + $3,050) - $20,000 = $69
Sold a put option and received a premium of $30.50 per share. Since the option was assigned, bought 100 shares at the strike price of $200 per share. total cost for the shares is therefore $20,000 (100 shares x $200 per share).
You also have to account for the premium you received, which is $3,050 (100 shares x $30.50 premium per share).
The current value of your shares is $17,019 (100 shares x $170.19 current stock price).
To find out your profit or loss, you subtract the initial cost of the shares from their current value and add the premium received from selling the put:
Profit or Loss = (Current Value of Shares + Premium Received) - Cost of Shares
Profit or Loss = ($17,019 + $3,050) - $20,000 = $69
Overall April seems it can do better. Waiting for my end year LEAP positions to arrive. Such as $Tesla(TSLA.US$ as I’m bullish for its innovation and FSD.
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