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AAAAHhhhhhh.... HERE is the misconception which is absolutely untrue; that
you can't "be forced to exercise a long option position."
The catch is whether the option is In-The-Money or not. If it is, it can be
randomly exercised... even if you are long! The reason, ostensibly, is that
since these are illiquid relative to ATM options, the individuals on the
floor will sometimes want to "close" the open positions in their accounts to
avoid surprises going into expiration. The exchange rules have been set up
to allow this to happen. Granted, this type of exercise is more rare, and
the key is how FAR ITM your option is... but it does happen without anybody
screwing up.
I agree, it IS strange.... but definitely true!
Any floor traders out there want to corroborate this with Exchange chapter &
verse? (Calling DrOEX?)
Big Profits to you,
Dave Donhoff
PS. there were no short Puts involved... obviously.
-----Original Message-----
From: steven poser <swp@xxxxxxxxxx>
To: deltaforce@xxxxxxxxxxxxx <deltaforce@xxxxxxxxxxxxx>
Date: Friday, August 28, 1998 4:20 AM
Subject: Re: LCOS Bull-Debit Spread answers
>David - There had to have been a short put in that strategy somewhere
>for you to get put with stock, even if the net position was long. Nobody
>can force you to excercise a long position in options EXCEPT that the
>exchanges automatically exercise open options positions that are in the
>money at expiry. If you have ever been exercised otherwise, somebody
>messed up.
>
>Steve
>
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