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Thank YOU Steve... and I stand corrected (the 3/4 rule reminded me of the
experience... hope there's not too much egg on my face);
The only time I've been exercised from the long side WAS on expiration
Friday... not prior to, as I had falsely remembered.
Still, something to learn from my experience;
I had legged out of my spread by buying back in my shorts at a profit that
more than also paid for the original purchase of the longs... and since the
longs were hovering right ATM, I figured I'd just ignore them, as their
premium was less than the commissions to liquidate them.
An hour before market close, the stock spiked upwards by something like
10%... putting well beyond the "3/4 ITM". (And of course... I was ignoring
the market that ONE hour...) I became the proud owner of 1600 shares of AOL
on a spike.
Thank GOD my broker was on it like a president on an intern! We were
assigned relatively close to the money (but IN the money) and he sold them
at a profit of a 1/2.
The next day AOL dropped back off it's spike. Now granted, AOL has been a
rocket over the long run, BUT I didn't have the capital to be long the stock
overnight (and have a margin requirement of 50% the stock value,) so we HAD
to be out of the stock that day. Any hesitation would have been EXTREMELY
detrimental to my financial well-being.
Hope this sheds light on "the unexpected and bizarre!"
Big Profits to you,
Dave Donhoff
-----Original Message-----
From: steven poser <swp@xxxxxxxxxx>
To: deltaforce@xxxxxxxxxxxxx <deltaforce@xxxxxxxxxxxxx>
Date: Friday, August 28, 1998 8:32 AM
Subject: Re: Getting Options Exercised Early
>Just spoke to somebody at the exchange and they said unless your borker
>does is for u w/out telling u, there is no way you can be exercised when
>LONG options except at expiry where there is automatic assignment when
>options are in the money by 3/4 point or more.
>
>Steve
>
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