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Stocks & Commodities V. 24:1 (63): Explore Your Options by Tom Gentile
Stocks & Commodities V. 24:1 (63): Explore Your Options by Tom Gentile
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Stocks & Commodities V. 24:1 (63): Explore Your Options by Tom Gentile
Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C.
ASSIGNMENT ON CALENDAR SPREADS
I was wondering if there is any possibility that an in-the-money short side of a put calendar would not get assigned on expiry. Or is the short side always assigned automatically?
The calendar spread is a strategy we use a lot, and understanding when assignment can occur is an important part of this trade. First, lets review the strategy. To create a calendar spread, the strategist buys a longer-term option and sells a shorter-term option. Both options have the same strike price. The trade can be created with either puts or calls. Puts can be used when the strategist has a downward or bearish view on the underlying asset. Calls make sense when the strategist is bullish on the underlying security.
Got a question about options? Tom Gentile is the chief options strategist at Optionetics (www.optionetics.com), an education and publishing firm dedicated to teaching investors how to minimize their risk while maximizing profits using options. To submit a question, post it to our website at http://Message-Boards.Traders.com. Answers will be posted there, and selected questions will appear in a future issue of S&C.
ASSIGNMENT ON CALENDAR SPREADS
I was wondering if there is any possibility that an in-the-money short side of a put calendar would not get assigned on expiry. Or is the short side always assigned automatically?
The calendar spread is a strategy we use a lot, and understanding when assignment can occur is an important part of this trade. First, lets review the strategy. To create a calendar spread, the strategist buys a longer-term option and sells a shorter-term option. Both options have the same strike price. The trade can be created with either puts or calls. Puts can be used when the strategist has a downward or bearish view on the underlying asset. Calls make sense when the strategist is bullish on the underlying security.
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