I purchased QQQ buy calls 1/17/25 with margin on Fidelity. To make small profit, I sold 5/31 $448 (0 DTE) calls and to my bad luck, stock price went up and now I got short sell assigned. To mitigate the damage I thought I should close my by call positions and buy near date positions 6/3 $452 call. I don't have money to cover short sell. I don't have any money. How to fix this now
-1000 shares at $448
10 buy calls 6/3 strike $452.
Fidelity accidental short selling
byu/Apprehensive-Oil4752 inoptions
Posted by Apprehensive-Oil4752
9 Comments
Call your broker. They will have a way to deal with this, likely involving exercising your long calls to close your short position. Your broker won’t let you get into a position where you can’t fulfill any obligations. Their systems check for that and will close any position they deem too risky.
You received $448k for the short sale of shares. QQQ is now at 452.35, so it will cost you $452,350 to but to cover them. As long as you already had $4350, you have enough money. If you didn’t, you can probably sell your long calls to come up with the difference (you didn’t give their strike price, so I can’t look them up to be sure.)
I was using long and short for far and near dated. I
You did not say what the strike of the Jan call is. I guess it is less than 448, so it has a lot of time value left. I would not exercise it.
I would buy-to-cover 1000 shares of QQQ. It is at 452 now so you will have a $4000 loss.
You may want to then STC the Jan Call to offset some of the loss.
The assignment turned the calls you sold into shares you owe someone plus money in your account. Use the money you received to buy the shares you need to deliver.
And stop trying to trade options until you know how they work. That isn’t a put-down; none of us were born knowing this stuff. But it seems clear that you need a lot more education on the operation and risks of trading options before you’re ready to do it.
Edit: People, ***stop downvoting the OP for his/her lack of knowledge***. It’s rude. It’s counterproductive. Yes, education is needed. Were you born knowing this stuff? I wasn’t; I’m pretty sure I was at least 7 before I felt comfortable.😉
We’re supposed to be here to help people be more successful at options trading, not put them down to make ourselves feel better.
Call Fidelty and ask them to help you unwind the position. Continued trading in and out of positions will only make things more complicated and likely increase risk.
A short call assignment is not usually a major problem if you understand how they work and that it takes a day for the funds to show in the account. Note that to close a short share position will be to buy the long shares and as u/Arcite1 points out you would have been paid $448K when you sold the shares so should have the cash available when those funds settle.
The Fidelty support number is 800-343-3548
It sounds like the option you sold was covered with the long option but they won’t auto exercise and OTM JAN25 Call (which would be disadvantaged for you) nor can they trade it after hours. If they aren’t comfortable with how much leverage you just took on they might cover the short position and or sell that call but would happen during market hours.
Call them and have them help you fix it, do some research before starting again. Oh and that short option could be exercised and you assigned at any time…it is the long holders discretion…so don’t be surprised if it happens again when you don’t expect it….prime time for this to happen is when nearing an ex-Div for an ATM option.
If this happens again, what I would do is close the short shares and open the short call that I intended to write. The increase in value of all the calls would be offset by the change in the stock.
If your plan was to let the MAY 31 448 calls expire and write JUN 06 448 calls, then you could have done that whether or not you were assigned. The only thing is the extrinsic value on this week’s 448 calls would have been a lot smaller.
I do plays like this on QQQ, but never 10 at once. That’s a lot of cash to sit on, but be short on the fund. The first time I got “assigned” made me panic a bit until I just decided to sell puts against it for a while. Within 10 days, the whole affair was a net break even.
I think due to the magnitude of what you found yourself in, unwinding it is the best way, and make notes about what you learned.