Naked Call become short seller
Naked Call become short seller
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Wawan Laksmana · External communityPost link
External question — Personal Finance Stack Exchange
Author: Wawan Laksmana
Original post: https://money.stackexchange.com/questions/155743
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
Thanks for the low interest rate for years, it forcing me to do trading.
I have been doing option trading for 1.5 years.
I usually do selling covered put and covered call.
The first year got profit then the last few months get wiped out, ended lost for 2022 Tax season.
This year I have been trying different strategy which is safer but less profit.
Lastweek, I tried a credit spread.
I sell to open call AMD @ $81 2 contracts.
I buy to open call AMD @ $82 2 contracts.
And on Friday AMD was $81.52. I did not close the options because I want to know what happen if I don't close them.
On Saturday I got msg The $82 call was expired and the $81 was assigned.
I thought my broker will close the $81 and debit 200x$0.52 from my account.
Then something bizzare (for me) happened.
I have -200 AMD in my account!
Never have that before.
So basically I am become a short seller :)
I tried to "Buy to cover" on Monday and it was not success.
Then I set up a Buy order during after hour 100 AMD share for $80.80
Then today I set up "Buy to cover" 100 shares for $80.90
Then the price went down to $80.78
Now I ended up with:
100 AMD Stocks and -100 AMD Stocks.
And it says "Short vs Box" I goggle it And understand it.
My question is:
When we become a short seller, In my case I have -200 AMD shares for Sat,Sun,Mon (3 days) do I have to pay interest on it?
How can I cover the short 100 with 100 I just bought?
What should I do? No button to click.
Will my broker cover it automatically?
Thanks!
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Bob Baerker · External communityPost link
External answer — Personal Finance Stack Exchange
Author: Bob Baerker
Original post: https://money.stackexchange.com/a/155744
License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/
Adaptation: HTML converted to plain text; contact email addresses removed.
For the most part, options that expire in-the-money (ITM) are automatically exercised by the OCC. Since your short $81 call was ITM, you were assigned and you ended up with a short position in the stock. Your long $82 call was OTM at expiration so it expired worthless.
You pay a borrow fee for every day that you are short a security. It varies from next to nothing to 100s of percent. For AMD, my broker is charging 0.25% (per year) today. It accrues daily.
If the stock/ETF pays a dividend and you are short on the ex-dividend date, you pay the dividend to the lender of your shares.
When you buy shares to cover the short position, your broker should automatically net out the positions.
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Quoted from Forex.com.bd-Editorial External question — Personal Finance Stack Exchange Author: Wawan Laksmana Source score (net votes, not local likes): 0 Original post: https://money.stackexchange.com/questions/155743 License: CC BY-SA 4.0 — https://creativecommons.org/licenses/by-sa/4.0/ Adaptation: HTML converted to plain text; contact email addresses removed. Thanks for the low interest rate for years, it forcing me to do trading. I have been doing option trading for 1.5 years. I usually do selling covered put and covered call. The first year got profit then the last few months get wiped out, ended lost for 2022 Tax season. This year I have been trying different strategy which is safer but less profit. Lastweek, I tried a credit spread. I sell to open call AMD @ $81 2 contracts. I buy to open call AMD @ $82 2 contracts. And on Friday AMD was $81.52. I did not close the options because I want to know what happen if I don't close them. On Saturday I got msg The $82 call was expired and the $81 was assigned. I thought my broker will close the $81 and debit 200x$0.52 from my account. Then something bizzare (for me) happened. I have -200 AMD in my account! Never have that before. So basically I am become a short seller :) I tried to "Buy to cover" on Monday and it was not success. Then I set up a Buy order during after hour 100 AMD share for $80.80 Then today I set up "Buy to cover" 100 shares for $80.90 Then the price went down to $80.78 Now I ended up with: 100 AMD Stocks and -100 AMD Stocks. And it says "Short vs Box" I goggle it And understand it. My question is: When we become a short seller, In my case I have -200 AMD shares for Sat,Sun,Mon (3 days) do I have to pay interest on it? How can I cover the short 100 with 100 I just bought? What should I do? No button to click. Will my broker cover it automatically? Thanks!
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