First, just want to say I probably deserve this for not knowing exactly everything into executing debit spreads and shouldn’t have done it in the first place. BUT I did a debit spreads on SPY on 9/11, expiration 9/12 for $53. I bought the $540 call and sold the $541 call. Essentially by today SPY was well above the $541 call and closed at $558. It was showing my max profit ($47) and thought it could expire and at the end of the day and I’d get the initial + the profit. I believe I just got railed and now have to pay for 100 shares of SPY at $540 so $54,000 – please confirm or give me any advice possible. It shows credit of $54,100 and cost of $54,000. I need any help to what I can do about this situation, thank you all
https://www.reddit.com/gallery/1fff4zd
Posted by Special_Prior6179
8 Comments
First, stop trading options, especially spreads, if you don’t understand them and don’t know how to manage them. Now, you’re fine, it will net out tomorrow and you’ll make the $47. The sold leg will be exercised and the shares will be called away at 54,000 (less fees). Take a deep breath, and know you don’t owe $54k. But, more complicated options strategies could very much cause more loss than what it shows in RH. Don’t let options strategies expire unless you have the funds in your account to take assignment. Stop, learn, paper trade, see you in a couple years (hopefully at least a few months, more likely a few weeks).
You are buying 100 SPY shares for $54000, and selling 100 SPY shares for $54100.
As others have said, you are fine. Just wait until tomorrow.
Also, I would recommend having a GTC close order on all options at all times. I default to giving up pennies to the market maker. I.e. if I have a debit spread with a 0.47 max profit, I’ll set a GTC for 0.43 and let the market maker have that last $4. Not worth the extra hassle of going through expiration.
You don’t do anything. This is what you want to happen for bull call spreads: the underlying closes above the short call, the broker’s computer handles everything, and the value of the spread width, minus transaction costs, appears in your account.
As mentioned, the fact that you don’t understand how that works suggests that you need to do more studying and not-with-real-money practicing.
Also, consider whether or not a one-dollar-wide spread like this is worth the effort.
Sell your organs.
In the future if you or anyone reading this thread needs financial assistance, simply sell your organs.
All problems will be solved.
notice i stated organs as in plural as this is likely what will be needed, yes you may perish but that is codb
Bruh, you’re fine. You’re up +47 bucks in profit. Don’t trade options if you don’t understand them or how you profit/lose. At least take some basic math class and net out your credit and debits.
Listen, get off Robinhood. Go to a brokerage that allows SPX. It’s literally SPY; even more liquid with better tax advantages.
Just do spreads on SPX. Since it’s cash settled you will never experience these hypotheticals. If you let a position expire, you will either make max profit or max loss in a worse/best case scenario. Never will you have to deliver, have a margin or maintenance call.
The brokerage platform automatically exercises/assigns and “cash settles” SPX positions if you let it expire. Debit spreads, actually any spreads are ideal for cash settled indexes.
Here:
Nasdaq: NDX, XND
S&P: SPX, XSP
Russell 2000: RUT
You’re getting 54.1k credit and 54k debit, for a profit of $100