Dan, can you do a short video on how to close a spread. Another word’s if I have a call spread, lets say XYZ Dec12 550/560. BTO the 550 at 30 and STO the 560 at 20. So my cost was 10. Now let’s say the expiration is tomorrow and the stock is at 570. Since I paid 30 on the 550 and received 20 on the 560 my strike would be 560 on my 550 call. So if the stock is at 570 do you just let both options expire? Does the brokerage house take care of the call you sold by giving them the call you bought? What happens if the call you sold no one claims the stock but instead they sell it on Friday like I do when I have a winning call? I don’t know if you should buy back the call you sold and sell the call you bought on Fridays expiration day or does brokerage firm handles the options the next day on Saturday when they expire? I know if I the stock was to reverses you would want to buy back the call you sold and sell the call you bought to close the spread to limit your losses, etc, but how do you close a winning spread at expiration? Can you expound on the different scenarios the proper way to close out a spread on or near expiration?
Thanks
Guy
Dan, can you do a short video on how to close a spread. Another word’s if I have a call spread, lets say XYZ Dec12 550/560. BTO the 550 at 30 and STO the 560 at 20. So my cost was 10. Now let’s say the expiration is tomorrow and the stock is at 570. Since I paid 30 on the 550 and received 20 on the 560 my strike would be 560 on my 550 call. So if the stock is at 570 do you just let both options expire? Does the brokerage house take care of the call you sold by giving them the call you bought? What happens if the call you sold no one claims the stock but instead they sell it on Friday like I do when I have a winning call? I don’t know if you should buy back the call you sold and sell the call you bought on Fridays expiration day or does brokerage firm handles the options the next day on Saturday when they expire? I know if I the stock was to reverses you would want to buy back the call you sold and sell the call you bought to close the spread to limit your losses, etc, but how do you close a winning spread at expiration? Can you expound on the different scenarios the proper way to close out a spread on or near expiration?
Thanks
Guy
What happens if we get called away in Dec? What do we do to supply the shares?