Suppose you sold a call or put option and now you have -1 contracts and pocketed the premium. Right before expiry you buy to close the position instead of letting the contract expire. When you buy to close, what happens to your contract? You're buying a long option, but doesn't the option you wrote still exist? The owner of that call or put still has the right to exercise. The contract for him doesn't just suddenly disappear because you closed. Could you still get assigned if you sold and closed the same contract at a later date, even though the two option positions technically cancel out? Who is on the hook if the one who now owns the contract you sold decides to exercise?
Submitted June 19, 2021 at 02:58AM by Incelebrategoodtimes https://ift.tt/35Dpgoa
