oh, in this picture you’re buying! you have $0 obligations, other than you have to purchase the option at a $24 ticket price! the person who’s selling you the option is liable for a lot if the price goes up past $170. i don’t think individual investors should do this!
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Replying to @DanielleFong @strangestloop and
the only case where they could is as writing a covered call, where if they have 100 shares already they sell the option to sell them at a $170 strike price. that would make some sense. selling naked calls on this is probably a bad idea!
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interesting - well i’ll learn more by doing ty
pic.twitter.com/3JyDxvhiab
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Replying to @strangestloop @DanielleFong and
Although you don’t have an obligation to buy the shares, if they expire in-the-money (e.g. the price of Apple at expiration is over 170), your broker will probably exercise them for stock, i.e. you’ll have 100 shares of AAPL for $17,000. To avoid that, just sell before expiry.
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Replying to @paulgb @strangestloop and
Even if it does get to 170, they usually won’t exercise contracts an account can’t support (ie if person’s account has < 17k in it). There are options like same day substitutions, and even if they did exercise, he could sell it. Though you’re right, selling option generally best.
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Replying to @Bonecondor @strangestloop and
Interesting, I always assumed a broker would do something like that if I didn't have enough cash when options expire ITM, but I've been afraid to try and find out.
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Replying to @paulgb @strangestloop and
I used to work for a brokerage firm and one of the jobs I had there was being a part of the team that monitored accounts that had positions they couldn’t support exercising on expiry day. I blew a lot of people out of trades at 3:30 pm on any given Friday for a couple years
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Replying to @Bonecondor @paulgb and
The caveat was always that we had the right to take action but not necessarily the responsibility to, since they were self-directed accounts, but we generally tried to not put Joe Blow’s $200 account with 2 ITM AMZN calls completely underwater
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Replying to @Bonecondor @paulgb and
it was your job to do this?? you would get them on the phone? wow
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Replying to @DanielleFong @paulgb and
It was my job to call clients and leave them a very nice voicemail telling them that if they didn’t sell out by 3:30, I would probably do it for them. Didn’t have to have them on the phone for actual sellouts, though! And it was only my job on Fridays
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amazing. very impressive tbh
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