AskTheRiskDoctorQandA 6 110711
ASK THE RISKDOCTOR: LIVE Q&A NOVEMBER 7TH, 2011
Rarely Answered Questions
Question: This scenario, based on fact, happened last month and can happen to anyone so there are some basic lessons to be learned: On Friday, the Weekly SPY options expired with SPY's closing price of 115.71. I was short 100*116/117 Call Verticals that should have gone out worthless. Instead, I was assigned 100 OCT07 Weekly 116 SPY Calls. On Monday, I was short 10,000 shares of SPY Stock.
Thanks! A long time follower!
©2011 Charles M Cottle
www.RiskDoctor.com
©2011 Charles M Cottle
www.RiskDoctor.com
©2011 Charles M Cottle
www.RiskDoctor.com
©2011 Charles M Cottle
www.RiskDoctor.com
Lessons: 1.) Trading Hours: 8:30 a.m. to 3:15 p.m. Options exchanges have a cut-off time of 4:30 pm, Central Time, for receiving an exercise notice. However, most brokerage firms have an earlier cut-off time that should be determined in advance since it may affect when you receive delivery of the stock.
2.) Stick around after expiry and see the writing on the wall. Don’t change your trading style during a trade. 3.) Maintain who you are and what you do and at what size. Don’t let the market dictate who you become. 4.) Getting lucky one time is not a good method for taking care of future problems. 5.) Perhaps Trade the SPX with European Style exercise, Settling to Cash. ©2011 Charles M Cottle
www.RiskDoctor.com
Rarely Answered Questions
Question: This scenario, based on fact, happened last month and can happen to anyone so there are some basic lessons to be learned: On Friday, the Weekly SPY options expired with SPY's closing price of 115.71. I was short 100*116/117 Call Verticals that should have gone out worthless. Instead, I was assigned 100 OCT07 Weekly 116 SPY Calls. On Monday, I was short 10,000 shares of SPY Stock.
Thanks! A long time follower!
©2011 Charles M Cottle
www.RiskDoctor.com
©2011 Charles M Cottle
www.RiskDoctor.com
©2011 Charles M Cottle
www.RiskDoctor.com
©2011 Charles M Cottle
www.RiskDoctor.com
Lessons: 1.) Trading Hours: 8:30 a.m. to 3:15 p.m. Options exchanges have a cut-off time of 4:30 pm, Central Time, for receiving an exercise notice. However, most brokerage firms have an earlier cut-off time that should be determined in advance since it may affect when you receive delivery of the stock.
2.) Stick around after expiry and see the writing on the wall. Don’t change your trading style during a trade. 3.) Maintain who you are and what you do and at what size. Don’t let the market dictate who you become. 4.) Getting lucky one time is not a good method for taking care of future problems. 5.) Perhaps Trade the SPX with European Style exercise, Settling to Cash. ©2011 Charles M Cottle
www.RiskDoctor.com
