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Uncle Diddles
LSU Fan
Member since May 2017
175 posts

Options help please - I've been a nervous wreck from this lol
So I'm a retard and jumped in options with no experience.

If I purchased a few call contracts on a stock and turned around and sold it, am I under any obligation to fill the order if the stock reaches the strike price in a month? Or since I bought and sold the contract am I free of any worry?

Just playing around with small money, last month I bought call contracts in Nokia to reach $5 on 12/18. I sold those contracts at a loss already. In the chance that 12/18 arrives and Nokia happens to hit $5 am I on the hook for filling those shares or is the person who bought my contracts from me?

Also, I did the same thing with a put on Boeing yesterday. Bought a put at 175 expiring 11/13. Shortly after that purchase the stock tanked and I sold that contract for profit yesterday. The stock price rebounded today and closed above that 175 strike price. So since I bought and sold those contracts and it also closed out the money, that would mean I'm not obligated to cover any exercised shares, correct?


I know I am an idiot and already exiting out of this stupid experiment I took on. I have been feeling sick from this though, worrying if I'll be on the hook for filling a large amount of shares which I can't afford.

I appreciate if anyone can let me know if I'm in the clear and if me buying and selling the orders, closed everything out on my end.

Thank you

Eta: also I use robinhood since I'm a newbie and though I've learned some of the lingo, I still do not understand fully and would appreciate if someone answers like I'm 5 lol.



This post was edited on 11/13 at 8:31 pm


PillPusher
New Orleans Pelicans Fan
Gulf Coast
Member since Oct 2009
3837 posts

re: Options help please - I've been a nervous wreck from this lol
If you sold the options you originally purchased you are no longer obligated to do anything. The contract is closed.


cgrand
New Orleans Pelicans Fan
HAMMOND
Member since Oct 2009
24306 posts

re: Options help please - I've been a nervous wreck from this lol
delete RH from your phone, immediately, and go read investopedia


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391
Uncle Diddles
LSU Fan
Member since May 2017
175 posts

re: Options help please - I've been a nervous wreck from this lol
quote:

PillPusher


Thank you, that eases my mind. That was the understanding I had but I also read a lot of conflicting type information and being ignorant to this all made it worse. Good to know that as long as you bought the original call/put and then just sold it, you have no further obligations.

quote:

cgrand


Lol like I said, I've scared myself enough that I'm ending this stupid experiment. Not worth the stress for me. I'll be moving on from RH and investing period lol.


Thank you guys. I appreciate it, I worked myself up big time over this and have felt sick from it.


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71
PillPusher
New Orleans Pelicans Fan
Gulf Coast
Member since Oct 2009
3837 posts

re: Options help please - I've been a nervous wreck from this lol
Another small tip is if you see an option still in your portfolio then you are still on the hook. If you don’t see it, it’s gone.


Brettesaurus Rex
New Orleans Saints Fan
Baton Rouge
Member since Dec 2009
37162 posts

re: Options help please - I've been a nervous wreck from this lol
I would stop options ASAP unless you’re SUPER comfortable with regular stock purchasing.


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50
Jag_Warrior
Virginia Fan
Virginia
Member since May 2015
1916 posts

re: Options help please - I've been a nervous wreck from this lol
quote:

Another small tip is if you see an option still in your portfolio then you are still on the hook. If you don’t see it, it’s gone.


Well, he was never “on the hook” for anything other than the money he paid to buy those options. He couldn’t have lost more than his purchase price.

It’s people like me, who short options, that are on the hook, as we might have shares put to us, be forced to settle a losing index trade in cash or be forced to sell shares at a certain strike price.

But it sounds like the OP has (hopefully) learned his lesson. This year, probably more than any other in recent memory, has brought out people who use real money to experiment with things that they have no business experimenting with in the first place.


StreamsOfWhiskey
Texas A&M Fan
The Woodlands, TX
Member since Jun 2013
453 posts

re: Options help please - I've been a nervous wreck from this lol
On a long call where the underlying is above the strike price he’d be on the hook for the strike price multiplied by 100 by the number of contracts, wouldn’t he? Would he be forced to take the shares because he didn’t close the contract?

Not sure if it happens automatically or if you have to choose to exercise an in-the-money call.



This post was edited on 11/16 at 6:58 pm


castorinho
Oklahoma Fan
13623 posts
Member since Nov 2010
71939 posts

re: Options help please - I've been a nervous wreck from this lol
quote:

On a long call where the underlying is above the strike price he’d be on the hook for the strike price multiplied by 100 by the number of contracts, wouldn’t he?
No. That would be a profit. Worst case scenario for OP, would have been for it to expire worthless.


redfishfan
LSU Fan
Baton Rouge
Member since Oct 2015
3689 posts

re: Options help please - I've been a nervous wreck from this lol
Trading options looks more complicated than it is. Go on YouTube and watch a few videos then you can get started. The risk reward can’t be beaten.


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Signal Soldier
USA Fan
30.411994,-91.183929
Member since Dec 2010
7195 posts

re: Options help please - I've been a nervous wreck from this lol
(no message)
This post was edited on 11/17 at 8:15 am


redfishfan
LSU Fan
Baton Rouge
Member since Oct 2015
3689 posts

re: Options help please - I've been a nervous wreck from this lol
Incorrect. He would have to write an call to sell to ever be on the hook. Buying a call and selling it will never result in being on the hook.


Signal Soldier
USA Fan
30.411994,-91.183929
Member since Dec 2010
7195 posts

re: Options help please - I've been a nervous wreck from this lol
10-4, I'll delete previous post so it doesn't confuse anyone.


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audioaxes1
Member since Jul 2019
165 posts

re: Options help please - I've been a nervous wreck from this lol
I am 100% sure you simply bought the options and then sold the contracts you were holding. You didnt write the contracts so you are at no risk of being "assigned" where you must buy/sell the actual 100 shares of stock.
So even if you didnt sell your maximum risk is those options expiring worthless.


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StreamsOfWhiskey
Texas A&M Fan
The Woodlands, TX
Member since Jun 2013
453 posts

re: Options help please - I've been a nervous wreck from this lol
I guess what I’m asking is on a call that I purchased that goes into the money, at expiration, will I be given the option of buying the 100 shares at the strike price or will it automatically happen?

I’m holding a couple of contracts right now on WEX, JD and GOCO that some are in the money. When they expire will my broker ask me if I want to exercise the option or will it automatically happen?

To clarify, I didn’t write a call. I get the risk with writing puts and calls. I purchased calls and now they’re in the money. Am I forced to take the underlying shares at expiration if i didn’t close out the contracts before hand?

I use Merrill Edge.
This post was edited on 11/17 at 7:04 pm


cgrand
New Orleans Pelicans Fan
HAMMOND
Member since Oct 2009
24306 posts

re: Options help please - I've been a nervous wreck from this lol
how is it possible that you are trading options without knowing what the end game is? Seriously...how is that possible?


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evil cockroach
LSU Fan
27.98N // 86.92E
Member since Nov 2007
5364 posts

re: Options help please - I've been a nervous wreck from this lol
You should go post this on Reddit Wall Street Bets


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Jag_Warrior
Virginia Fan
Virginia
Member since May 2015
1916 posts

re: Options help please - I've been a nervous wreck from this lol
Here’s a link to an Investopedia page which will answer your question. I’m not being salty, but these are things that you should know BEFORE buying (or selling) options.

Holding an Option Through the Expiration Date


TheChosenOne
VCU Fan
Member since Dec 2005
16979 posts
 Online 

re: Options help please - I've been a nervous wreck from this lol
quote:

Worst case scenario for OP, would have been for it to expire worthless.

One thing to note for the newbies, some online brokers default to automatically exercising the contract. Make sure to do your research both technically and with your broker.




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StreamsOfWhiskey
Texas A&M Fan
The Woodlands, TX
Member since Jun 2013
453 posts

re: Options help please - I've been a nervous wreck from this lol
Thanks for that. It looks like it is up to the broker on how they handle ITM options.

As far as trading options, I’m aware of the risks, strategies, etc but was unsure how the broker would handle ITM options once they’ve expired. I’ve not held options to expiration and have typically sold them before expiration.

Thanks for your help.


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