<p>What happened on Friday is that it was reported that the Apple Stores in China were quiet. Apparently they sold like crazy at the carriers though - a bit opposite of what happens in the US.</p>
<p>I did not get exercised on any calls in AIG, and now the stock is higher than where I would have been assigned. I sold a little stock. I am keeping some AIG. </p>
<p>And I will accept the luck. :)</p>
<p>Tepper says that maximum downside is 3% or so if they don’t immediately resolve the fiscal cliff and the upside is “a lot”.</p>
<p>I like David Tepper. I have said from the beginning the fiscal cliff is baloney.</p>
<p>We will see.</p>
<p>He’s pretty much saying its baloney also - politicians want to get elected.</p>
<p>Like I said, I like David Tepper. :)</p>
<p>I have been diligently taking profits the last few days, and mostly feeling stupid about it as everything kept going up. Selling calls on many positions. I felt slightly better yesterday when we had a pullback, but as-of right now looks like I will get called out of SPY at 145. I expect an early exercise because it goes ex-dividend tomorrow. I was surprised yesterday to get an early exercise on short INTC 20 calls. Also sold calls on C and GS that got totally run over. This fiscal cliff circle … ‘negotiation’ is making me sick, but that’s a political discussion so better not to go there.</p>
<p>You shouldn’t get assigned on the spy calls.</p>
<p>There is still a premium in the calls, so it would have made more sense to sell the calls and buy the etf if somebody was thinking of exercising the calls. If you exercise the calls, you lose the premium, and there is still some premium.</p>
<p>Also, if you look at the 145 calls and the puts…</p>
<p>The calls are around .30 and the puts are around 1.00.</p>
<p>If I bought the calls at .30 and sold the puts for a buck that would be
similar to buying the etf without getting the dividend.</p>
<p>I would get a .70 credit if I did the above. So that would be the equivalent of buying the spy for 145 minus the credit of .70. This means you bought spy for 144.30. That sounds like a good deal when the spy
trades for 145.12. Except, if you buy the spy for 145.12 you get the
dividend. Looks like the div is going to be around .82 give or take a few cents. </p>
<p>It is possible that you may get assigned, because some traders are, 1, stupid, or two, spy is going to trade higher tomorrow and the traders have close to 100 percent certainty of this.</p>
<p>I hope this post is understandable.</p>
<p>Bottom line, I wouldn’t bet on getting assigned the 145 calls early.</p>
<p>GLD and SLV have been dropping like a rock. Is this as one of those Najarian guys is saying, traders frontloading Paulson?</p>
<p>Dstark: I’m not completely following your argument. The call expires Saturday. If the strike is 145, isn’t it true that if the price is above 145, unless the buyer sells the call or maybe tells his broker not to buy the stock, it will be exercised by the end of the day (4:15?) At what time do you have to own the stock when it goes ex - dividend to get the dividend?</p>
<p>You have to exercise today to get the dividend. Spy trades ex dividend tomorrow. So do the qqqs.</p>
<p>Tomorrow after the close, the 145 calls will be an automatic exercise if spy closes here.</p>
<p>I hope you are not long in the money calls in spy or the qqqs.</p>
<p>Well I don’t completely get your other thing. If I bought the 145 call and put today, I get .70. If spy closes at 145 tomorrow, I would be assigned from the put and the call. If it is > 145, I would only get assigned on the call which I would have the stock for 144.30. I own 1/19 128 spy calls and 60 qqq calls - ohoh! - I guess I’m going to lose some money tomorrow.</p>
<p>Wow, did I just get lucky. I shorted the S&P500 emini at 1428 and in five minutes it dropped to 1391. I tried to cover there but I could not get it to execute. It went off at 1407. Still a nice trade. Very lucky for once.</p>
<p>Futures just moved down (very very) sharply. I don’t know when the cutoff is to exercise calls but I am guessing I won’t get exercised on 145 calls.</p>
<p>I thought with SPY trading at 145.25 after the close Thursday, anyone long SPY 145 calls would want to exercise their in-the-money call, because after ex-dividend that 145.25 is going to be 144.35 if the market doesn’t move. I didn’t think it was any more complicated than that. The only question is what time is the deadline for exercise.</p>
<p>I got an email the other night at 3:33 am notifying me of an early exercise on INTC. I will let you know if I sell SPY at 145. At this point it looks like it would be a huge gift.</p>
<p>(Sorry for some freudian reason I was writing 125 instead of 145, then could not edit but was able to delete my entire post, and then repost… )</p>
<p>No. The calls were priced as if spy was 144.35 or something like that. Why would there be premium in the 145 calls if they were going to be exercised? The calls were trading .30 at the close today. Right?</p>
<p>Maybe some people will exercise and you will get lucky, most won’t.</p>
<p>Wow. I just talked to Schwab, and Schwab told me you have to exercise by 5 pm est today to get the dividend in spy and qqq. If, the drop happened after that, and the market stays where it is, there are going to be some very unhappy traders who exercised some otm options.</p>
<p>Those dec 144.5 and dec 144 calls don’t look to good right now…
There is going to be some weird stuff going on tomorrow.</p>
<p>Fortunately I do have a lot of spy and qqq put spreads for protection. If the market drops enough tomorrow - I’m loading up the boat.</p>
<p>Razorsharp, nice. Doct, I have to do the dishes. Then I will answer you. :)</p>
<p>I’ll be busy making up my list of what to buy</p>
<p>Ok… Doct…</p>
<p>When you are long options, you don’t get assigned. You exercise.</p>
<p>If you are long the straddle…tomorrow you are only going to exercise the call or the put.</p>
<p>Today, many of the calls were exercised to get the dividend. I can see the 144 calls and the 144.5 calls exercised. So for example…instead of losing .75 with the 144.5 calls tomorrow. Traders are going to be long the etf with the potential to lose more. Ouch.</p>
<p>Doct, you are going to lose the dividends with those deep in the money calls tomorrow.</p>
<p>At 4pm SPY was settled at 145.09 and the 145 calls were trading at around .30 That looks like .21 of time value, but I would say that is the time between 4pm and the 5pm cutoff for exercising the options. SPY was trading at 145.21 at 5pm. The only trade that makes sense to me would be for somebody long the option to sell SPY after 4pm at 145.20 or wherever you can sell it, then exercise the 145 call which leaves you flat. If you hang on to the option until Friday you have a 90 cent hole to work your way out of, so it makes sense for most of the 145 calls to be exercised today. Got my fingers crossed!</p>