I have been trading AMZN in reaction to some assigments and I have not reported timely.
First, I was assigned 900 shares. I sold the shares and shorted 9 Aug puts again. This resulted in a new assigment of exactly the same number of shares on Friday. So I decided to sell the shares and also sell 9 of my long puts, leaving me with the call portion of the trade, 2 short Aug puts and 9 long puts. Yesterday I was assigned the last 200 shares from the short puts. I sold those shares and sold 2 additional puts, leaving me with 11 long puts.
Today with the strong move down in the stock I decided to close the position all together. This was not exactly the best of trades, so I will go through it in detail later on, so we could better learn from the experience.
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4 comments:
Do you collect the time value as profits each time you are assigned on puts you sell, sell the shares, and then sell the puts again? It appears to me that someone out there doesn’t understand that they could sell their long puts / stock and receive more money.
Rick
NEVER EXERCISE OPTIONS, PERIOD!!
If you are less than a week to expiration, you have gone too close to expiration, and you should ask yourself WHY!?!!??
If in a calendar or ratio calendar or PCCRC your shorts are assigned and you don't want to own (or short) stock, close the stock position and SELL (NOT EXERCISE) an equivalent number of shares (contracts).
YOU DO NOT WANT TO EXERCISE EARLY because you are giving up premium willingly and without reason.
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When you are assigned is because the person in the other side of the trade has figure out a way to take advantage of that situation. To me it usually results in a very small profit.
Juan:
I have just starting reading your blog and find it extreamely informative.
Have you tried using Think or Swim for entering these trades?
Rahul
Hi Trader R
I have not actually opened an account with Think or Swim. I researched their demo software, and I had to enter the trade in the same format as OptionsXPress (see above) or simply call in the trade.
I suppose is a good practice to call the trade while asking your broker to implement this trade in their web sites or trading software.
Please call them and ask specifically if you can enter an "iron Condor" with more longs than shorts. They would understand that.
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