Monthly Archives: January 2010

Stock options are American style

By admin | Published: January 17, 2010
Although it is generally more profitable to sell an option than to exercise it early, there are exceptions where option holders will exercise early. This can happen particularly around the time of a stock going ex-dividend or when liquidity in an inthe- money option series is such that holders find it difficult to sell their [...]
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Business limit risk

By admin | Published: January 15, 2010
Although spreads are attractive as a means of limiting options exposure, there are potential pitfalls. If one leg is assigned without there being an opportunity to exercise or liquidate the other, this can create delivery and settlement problems. Or it may happen that it is difficult to close out both legs at the same time; [...]
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short option position

By admin | Published: January 12, 2010
It is extremely important that you remain accessible to your broker while you have an open option position – particularly a short option position. Given the need for rapid action in the event, for example, of a margin call being made or a position being assigned, your broker may need your instructions at very short [...]
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