Trading Options For Dummies by Joe Duarte

Author:Joe Duarte
Language: eng
Format: epub
ISBN: 9781119363712
Publisher: Wiley
Published: 2017-08-28T00:00:00+00:00

Short: OTM

Expires worthless

Monitor news and the account after the close. Even when the option closes OTM, anyone can choose to exercise their rights, resulting in an assignment for you. If the stock price is hovering right around the strike price and OTM is in doubt, and you don’t want to own or short the stock, buy back the option prior to expiration to avoid the risk of automatic exercise and stock exposure over the weekend.

Short: ATM

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Monitor news and the account after the close. Once the option is ITM by even $0.01, assignment risk is automatic. To avoid assignment, if the stock is hovering around the strike price and OTM is in doubt, and you don’t want to own/short the stock, close the short position on the last day of trading to avoid the risk of automatic exercise and stock exposure over the weekend.

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