re: Options Trading Thread

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For example.. if a random UVXY call buyer elected to exercise early, could it so happen be that his were the specific securities you sold the market? I’m not sure if this makes sense

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Yes, the question makes sense. Basically any long holder, not just the one you sold your option to (as he may have already “sold to close” his position before it went in the money), may elect to exercise any American-style option prior to expiration if it’s in the money. And at expiration, most brokerages will automatically exercise an assignment of the option if it’s $.01 in the money.

Although several years ago, I had sold short some Apple puts, and even though the stock was something like .15 ITM (best I can remember), I didn’t get assigned shares. I would have been OK with that assignment, because a couple of hours after the close, the stock popped .50 or so back OTM. But normally, something like that doesn’t happen and there would have been an assignment.

As a side note, there are options traders who employ short options strategies (planning on executing an ITM assignment) to capture dividends. It’s not something that I’ve ever done, but both Tom Sosnoff and Kirk Du Plessis have spoken about the strategy before. It’s a more sophisticated and less capital intensive way of capturing divs than just buying an equity and hoping that it recovers to your purchase price after the ex-div date passes.