Being Assigned an Exerice Notice; Any Problems?

Yesterday's post discussed what happens when you are assigned an exercise notice.  My premise is that it's seldom a problem.  I'd appreciate hearing some of your experiences to see if my perception of the world agrees with your experiences:

[I'm still trying to find the right polling website to use.  If you have suggestions, or if you want to elaborate on replies, please comment.]


4 Responses to Being Assigned an Exerice Notice; Any Problems?

  1. gregf 08/05/2009 at 7:33 AM #

    I’ve been assigned twice, Once was a stock that i had sold calls on, and i got an exercice notice 3 days before expiration. The company had announced good results and i guess somebody wanted to be long the stock.
    the second time i had a ratio spread (long stock, long atm calls and short 2*OTM calls) and got assigned on the short OTM calls about three weeks before expiration. This left me short the stock, and I had to wind up this position (at my brokers request).
    All in all not huge problems, but a bit unexpected.

  2. Mark Wolfinger 08/05/2009 at 9:40 AM #

    Thanks for sharing.
    That 2nd time was a gift to you. I don’t understand why the broker would not allow you to remain with a position of long one call and short 100 shares, but perhaps the stock was difficult to borrow.
    Unexpected – yes, I agree with that. Three weeks early is wonderful for you. But it should have caused no problems. In fact, it’s likely to have handed you a bonus profit.
    A simple exercising of your long call closes the position – with the maximum possible profit. And if that long call still had time premium remaining, I hope you were able to buy stock and sell the call, collecting that additional time premium.
    You did not mention, but I assume those OTM calls were no longer OTM at the time they were assigned. Customers make mistakes, but that would have been a big one.
    Good trading Greg,
    Mark

  3. kbluck 08/05/2009 at 11:33 AM #

    There’s always the dividend arbitrage. SPY and DIA often hook the careless spread seller looking to hold through expiration since their ex-dates are usually on expiration Friday. So close and yet so far…

  4. Mark Wolfinger 08/05/2009 at 12:15 PM #






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