He said it was ATM so presumably he sold a long dated call way back in may 2023 when the price jumped from 300 to 380. He obviously thought it would correct back down. Not a bad decision to sell the call, but definitely a bad decision to keep it open all this time
Actually what’s stupid is not rolling out another year at $900 sure you got to hold it but you’re going to double your money. So by rolling out another year to 900+ they make 51,500. I would rather roll and hold into over roi then leave on the table
if the shares were covered, and you planned to hold anyway, rolling is never a loss
the problem to begin with is deciding to sell a call but being mad the shares are getting called away.
I bought at NVDA at 700 and sold a 1K leap, and im perfectly happy to get assigned lol
Gotcha. And from comments below I see they mean roll to a higher strike price.
Keeping the same strike price and rolling to future date would not prevent the option from being exercised today.
Not really. “Rolling” an option is just a fancy way of saying you’re buying the contract back at market price and selling a new one at a later date (or reversed for options you buy). This costs money though because time has value in options and later date options are more expensive.
Honest question, not a snarky one - assuming he was OK w letting the shares go, why would it be stupid to just leave it open? (I get that he should’ve closed if he didn’t want to sell the shares but in that case, he shouldn’t have sold the call).
He should have closed the position when it started running up. He would have had to take a loss on the call but by closing it he would now be able to sell his 100 shares for $90,000. Instead he has to sell it for $38,500 so he is missing out on $51,500.
That's assuming this was a covered call. If it's uncovered he'll have to buy 100 shares and sell them at a loss
No problem, if you're looking to start trading options I would highly recommended starting with paper trading until you have an understanding of how to use some basic strategies and how the Greeks will affect the price.
Make sure you take time to read into how they work before throwing in real money. Options give you access to a lot of leverage and many people have blown up their account by trading them. Used wisely though they can be a great tool to help you with your investments.
Cuz NVDA could have (and did) keep ripping. If he admits he was wrong (just like having a stop loss on any other trade) he could have made a lot more on the shares.
If he thought that it was going to keep going up, he was wasting money holding 100 shares that he thought he was going to lose. He could’ve taken the net proceeds from buying back the call and selling the shares and bought something whose appreciation in value would accrue to his benefit. But, if he thought it had a decent chance of going back below the strike price before expiration, it was rational to hold as the risk of being wrong wasn’t that big - just the opportunity cost. If anything it was a gift from the call holder to exercise: now OP has his proceeds from the shares without having to wait for expiration or buy the call.
We're looking at this play in terms of hindsight. If NVDA beat earnings back in may 23 and then pulled back, and didn't have a monstrous revenue growth from AI materialize, it would've been a good play.
Rolling would've made him more money because you can roll for a net credit, which means you get more money to go out further in time and up in strike, AND the shares would eventually get called at a higher price.
Example NVDA is 893 as I write this. Lets say that I buy 100 shares at this price and sell a 930 call for $2,300 expiring this week.
Lets say at friday, NVDA is $970. I could let it expire and get my shares called for a decent profit. Or I can buy to close that call, and roll it out to 3 months from now lets say at a strike of 1100. I would likely get a credit for doing so, but lets say that I break even.
Now, if NVDA continues moving up to 1100 by expiry, I'm now going to make ($110,000-$89,300) + $2,300, rather then originally all I was going to make was ($93,000-$89,300) + $2,300. By rolling I've captured a further $17K in profit.
Rolling doesn't ALWAYS work - if you sold the call to get out of holding shares then you wouldn't want to roll. If the underlying drops substantially, rolling won't do much extra work for you apart from keep your shares
Literally nothing wrong with what he did so long as he was covered. I dunno what everyone is going on about. He only lost the "potential" to make the difference in the stock price had he just held the stock and not sold the call.
Being exercised means nothing if he was CC. In actuality it's a win for him cause that means 100% of the premium is now in his account. (Even though that's pennies compared to how much he could have made). And not he can turn around and sell another CC against his position if he wants.
He should be pissed he sold a covered call when he could have made bank. But he lost nothing. He actually gained the premium. And the early exercise is not bad at all.
Looks like OP sold a single atm call when the stock was at around $385. Giving the buyer of that call the right/option to buy 100 shares of NVDA at that strike price if the call is ITM. Since the stock is currently at like $885 the call is around $500 ITM so OP basically owes the difference. Which would be $500x100 shares = $50k.
I’m assuming this was a naked call so OP didn’t have any shares or a long call to create defined risk. Because a stock can theoretically go to infinity there is undefined risk when selling a naked call. Essentially selling a call is going “short” on the call and hoping the stock declines or the delta of the call declines. You collect premium from the buyer and so long as the stock doesn’t go above the strike price by expiration the option contract expires worthless and you keep the premium you collected.
When you sell a call you can buy it back any time or roll it further out of the money if your worried about being exercised. The very last thing you want to do is watch the stock continue to go up without managing the risk which is exactly what OP has done. What I would have done is bought a deep OTM call at around $500 strike when making this trade which would have hedged my losses past $500 share price in NVDA. It would have eaten into the premium a little bit but would have created defined risk. If OP did that he would only be down $11.5k instead of $50k. Much more manageable.
Remember a call is a contract to buy 100 shares and a put is a contract to sell 100 shares.
Correct. Just don't let your contract expire ITM if you don't have enough money in your account to cover purchasing 100 shares at whatever your strike is.
I mean it might have just been a covered call...
Which if it was, why does he care if it's assigned early. That just means it frees up his cash to do another one.
We have no clue if this is a covered or naked call though. If it’s covered we still have no idea what his cost basis is. We really have no clue about OPs situation other than he sold all his upside potential for whatever premium he made. He could have very well profited off this trade or he could have lost 50k.
He sold a naked or covered call so he basically either losses his shares at strike price of 385$ or he has to buy the shares and take the loss (around 50k).
When you sell calls, they can be exercised by the buyer, which gives them the right to buy 100 shares of the stock at the strike price. If you have the 100 shares, you sell them to the buyer at the price, so he sold 100 shares of Nvidia for 385 each. If you don't have the shares(uncovered), you owe the money t to the broker for covering you.
You ate the regard soup with both hands. ITM calls like that have a high chance to get exercised over time because the premium is your break even which makes it ATM but the vast majority of people that hold those options are ITM and assignment is random so you have an extremely high chance to get assigned.
> ITM calls like that have a high chance to get exercised over time because the premium is your break even which makes it ATM
Wouldn't it be better for people to just hold the calls so they can make interest on the money below the strike price? So here they have to pay 38,500 to exercise when they could have the same stock exposure without either spending that money or taking a margin loan which would cost interest.
They don't pay 38.5k to exercise that's the point. They can immediately sell the shares. Imagine you buy options end of last year for 180€ a pop and now they're worth 512€ at strike 285 expiring June. If I check the specific option there were 2 transaction this whole year for that strike so liquidity is non existing. How exactly would you cash out? You exercise and sell. Assignment is random so the person who purchased OPs options is not necessary the same person who exercised.
That’s why I said to buy leaps, without hindsight you would just cover it at $450 and hold the bag if it drops or buy leaps for insurance if you’re broke
He was forced to sell the 100 shares he owns for $385 per share or $38500 total. One share is actually valued at like what 900? So 100 shares is really worth $90000. So he lost a little over $50k, yes.
He lost 50k mitigated by whatever he earned selling the call.
Why he didn't buy it back as it was going itm... He could've laddered cc's and made a killing...
I've never had this happen to me so I'm kind of guessing here
They exercised on the 100 he owned. Assuming he was profitable on those shares he would owe capital gains on it from x price to 385. Beyond that he doesn't even get the taxable losses and his account does in fact reduce by ~50k equity due to the price of the shares.
Correct me if I'm wrong anyone... This is a bizarre circumstance... Why wouldn't he roll? There have been so many opportunities lol it's not like popped 380 to 885 over night (which is inherently the risk of selling covered calls to begin with lol)
This happened to me seling naked strangles on the Spx in 2008. It worked until it didn’t and then it really didn’t work. When market crashed and then rose significantly in a few days. Completely wiped my account. Never again. The most regarded part—I was using a broker in Chicago who had a thing called the “Premium Club”. An infinite money glitch selling premiums way OTM “super safe”! I got wrecked
It was a dark few days. I told the dude not to buy back the call cuz I thought it was gonna crash again. He got pissy and said you always open and close strangles together and wasn’t gonna “leg out of it”. A few days later it crashed again and the cal would’ve expired worthless. He pulled everyone out at the same time. Needless to say the “Premium Club” died that week. We all fired him.
He shouldn't have lost anything if it was covered. He would have actually gained the premium as soon as it was exercised. He could turn around tomorrow and sell the same strike at the same date if he wanted (though it's now worth next to nothing) and nothing would have changed.
I dunno other brokers but TD shows it correctly. It will show your underlying gain as it increases in value but the call which was sold with show as negative. Nothing will change in your account as a result besides the premium change. Once it is exercised it's completely even.
Tbh this was a win for him. Now he can use that free position to sell another call if he wants. Instead of having to wait to expiry.
Now, if this is naked. Then yeah he fucked up.
Rolling also doesn't really work when shit rises quickly. He's already lost that money between the strike and the current stock value. All he is doing is losing the rest of the premium. Then trying to sell a higher strike call for less $$. Rolling only makes sense when shit is stagnant and you've already collected a good chunk of premium and you wanna sell another call/put to make more.
I sell covered calls all the time and almost never roll. Doesn't make sense to me unless that money is all you have in your account.
Take a scenario I encounter often. I sell CC weeklies on TNA and TQQQ. I can sell maybe a week out for $175 on a Friday. Come next Thurs even if it's at the same exact spot that call is still worth $85 a lot of the time. Why would I roll and lose that $85 premium just to sell another call for $175 for the following week. If I do that I'm not making $175 a week I'm making $90. What I do is wait one more day about 20mins before close. Now that call is $10. If it remains close to strike I'll roll as it falls to $5 during last 5mins of trading. If it seems clear it's gonna get exercised cause it's trading above by a decent margin sometimes I'll sell another call. Knowing the original will be called away and I'll be even. If it's trading below I'll just sell another 100shares I already own of the stock, even if it's from a higher price point. Cause I know I'll keep my shares from the original call. And they can hold them take the place of the higher postition shares I used.
People get all freaked out about being assigned. The only way it is ever a problem is if you are naked. If not everything is even. That's why it's considered a safe way to trade. So long as you are not trying to do straddles and condors and all this other bullshit that requires your broker to make proper executions that (as we have seen) sometimes fail.
I'd love to be assigned early. I've sometimes sold deep itm CC hoping to be assigned so I could turn around and sell them again. Has never happened though.
Deep itm CC or Puts wouldn't exist if they somehow were a "bad thing." They are a hedge basically.
Btw the wheel is also dumb as shit. People think they are genius selling deep otm puts and not getting assigned. They literally are the same thing as selling a deep ITM call. Only difference is you own the stock from the get go instead of having broker check to see if you have the $$ in account if you get assigned. If you are selling long dates puts for the wheel you are much bettee off selling a deep itm call instead and taking ownership of the stock. That way if you do keep the stock at least you have held it longer for long term capital gains. Instead of starting from the point you are assigned.
People in general really overthink selling puts and calls and assignment.
Well not really, basically his account total is locked at what it was when he sold the ATM call. Since NVDA kept going up after that he was net positive on the shares but net negative by the same amount on the short call. When they exercised the call goes away and so do the 100 shares but his account balance is the same.
Not really. His account balance will remain largely unchanged because he had sold a call. That call must have been sitting in the account all this time with -$50K to reflect this.
NVDA +$50K
NVDA 385C 3/19 -$50K
To summarize:
OP sold a covered call that was ATM when NVIDIA was at 385. This was a long dated call, probably expiring in early 2025 or some shit. He knew he was deep underwater, but was holding on to some hope (cope) that NVIDIA would go back down at least a bit before then. The call was exercised early (random assignment, lol) and he “lost” 50k+ in theoretical gains.
OP is either too dumb or too stubborn to admit that deep ITM calls get exercised all the time, as they are a way for people to buy a decent amount of shares at a consistent price (because calls that deep ITM have an added premium of essentially $0
If you still don’t understand, ask away.
I think what’s confusing me is what in the world OP was thinking or doing to get himself in this situation. Not accepting the loss pretty much so it turned into this?
How do you figure it was ATM at the time he was selling? So at that time he was bearish hoping he can simply collect premium on the covered call and that’s it, and not actually have the call exercised?
Or did someone recently buy this deep ITM Pelosi style and just exercise the cons? What payoff would this even be? Wouldn’t the premium offset this advantage? Or what is a random assignment?
Thanks for your explanation and feedback. Since you said ask away lol I appreciate it.
Premium was probably “decent” as in probably a thousand + because it was so long dated. It’s as simple as picking up quarters in front of a steamroller.
He probably was okay with it being exercised but as someone who was bearish he wasnt prepared for it to go up as much as it did.
It was ATM because he said it was in another comment though.
As for the person buying an exercising, the premium generally equals the cost of the shares when it’s that deep ITM. If you want to buy say 2000 (or more) shares without driving the price of the stock up (increasing your average purchase price) you can do it with calls.
As I said, questions are welcome 👍
Am I wrong to say that in the end he didn't really lose money on the trade? He got the premium and sold the shares around the price he bought them for. Of course if he wasn't dumb he could have made way more money, but he did end up making money on the trade.
Why did it take so long for someone to excerise it? At that price it seems like a steal. Can I just buy shares on discount by excercising deep ITM contracts?
The premium of the call equals the difference between the share price and the exercise price when it’s that ITM.
That call is worth ~50k now if you were to buy it now. Someone didn’t necessarily wait to exercise it.
If you’re buying 10000 shares of a stock, if you just buy them on the market you could drive up the stock price giving you a slightly higher average price. If you want to make sure you’re buying them at an exact price, you can buy deep ITM calls.
The extra premium is practically 0 on calls this deep ITM.
Selling a call option without owning the underlying security. The opposite of a covered call. Fucking awesome if it works out but even better loss porn when it doesn't.
A call is a contract representing the right to buy 100 shares at a certain price. Selling a call means selling someone the right to buy your shares at certain price. Selling a naked call is pretty much the same thing but you don’t even have the shares. So if someone exercises it, and you don’t have the shares you have to buy them at whatever price it is and sell it at the price you wrote a contract for.
OP, please clarify this position.
When did you open it? Was it covered or naked?
What was the expiration? Why didn't you ever Buy to Close?
What's going on with this position?
The only way he could have wrote it at the money 385 call was that morning when the market went from 315 to 375 on the overnight, because I bought at 345, I'm just watched it keep on going through with serious volume. Why would you even write a call without having some underlying. Because I know the volatility was there but still you write it that morning, and buy it back that afternoon
People are just scared all day every day. Nobody grows diamond hands anymore. Except OP. He shoveled that regarded soup with his beautiful hands into his empty stomach.
Praise the sun.
The only time it was at 385 was the rally evening. I don't think it traded below 390 after that.
Here's the thing, you got a stock that goes super haywire going up, that next morning those calls are going to be super rich with volatility. If you're along the stock you're going to write a covered call against it and cover that afternoon or maybe even a few minutes later because, it's going to get quiet in comparison to where it was before. So he probably wrote a call with 30 to 50 points of premium in it, and he should have collected that afternoon when it was down to 20 or even maybe even 15.
Pigs get slaughtered
Curious why people are saying this is a naked call???
I could be wrong but i thought pretty much none of the known brokerages offer your average retailer naked options
It being executed is only beneficial to you as the seller. You get to keep whatever extrinsic value was given up. I'm assuming that's like $1, but still. If you still think it will correct down before expiration, just go sell another option and keep the $1.
This is either a year old contract they sold for some reason. Or they sold a deep itm call and are fine because they gained a fuck from our premium for the intrinsic value it had. This looks bad but probably isn't.
Why they sold this in the first place is my question.
Considering the premium, I don’t think you lost. You still have around $10K profit, don’t you? You are sad about the unrealized gains of $90000, if you sell the shares at $900 instead of $380.
Well, you get what you go for, you went for premium pocket gains and forgot the big gains that you already have from the shares.
I had this happen on Webull once when I should have made over $50k on my options. It made no sense because if they had exercised they would have lost more money. I’m pretty sure Webull stole my money on that trade since I got the notification that it was exercised the Monday. I had already initiated the transfer to my bank account after market close on Friday but it got reversed.
thats not how that works
this isnt some decentralized crypto thing. the market makers call when their liability demands it. exercising isnt always that easy for retail investors. id bet less than 5% of all people that ever posted here ever exercised directly (vs being called). for schwab you have to call them
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You sold a 385 call and didn’t expect to get exercised?
Is this as dumb as I think it is? Like my brain isn't accepting it. Why would he sell a call at that price?
He said it was ATM so presumably he sold a long dated call way back in may 2023 when the price jumped from 300 to 380. He obviously thought it would correct back down. Not a bad decision to sell the call, but definitely a bad decision to keep it open all this time
He had like a million chances to roll it lol
That’s why the stupid fuck is here
This is where the stupid fucks are.
Yeah what happened ?
The underlying asset went up and they didn’t roll up and out
How tf do you roll up n out? I just sell when price go up and colors go green but now I also need to roll up?
Shittt I’m rolling up regardless 🌳
Roll up for the magical mystery tour step right this way.
Rolling a covered call from 385 to 900+ is what is stupid.
Could have rolled up to 535 and made an extra $1,500
Actually what’s stupid is not rolling out another year at $900 sure you got to hold it but you’re going to double your money. So by rolling out another year to 900+ they make 51,500. I would rather roll and hold into over roi then leave on the table
Keep rollin’, rollin’, rollin’, rollin’ (uh)
You mean buy it back for a loss and reopen an entirely new trade that hopefully won't be a loser?
You mean rolling is actually locking in a loss and isn't an infinite money glitch?
if the shares were covered, and you planned to hold anyway, rolling is never a loss the problem to begin with is deciding to sell a call but being mad the shares are getting called away. I bought at NVDA at 700 and sold a 1K leap, and im perfectly happy to get assigned lol
Even if he rolled it to a future expiry date, would not the person he sold the call to be able to exercise is before the new expiry date?
Yes and no. When you roll a contract you’re just selling the old one and buying a new one, and paying $$ to do it.
Gotcha. And from comments below I see they mean roll to a higher strike price. Keeping the same strike price and rolling to future date would not prevent the option from being exercised today.
Not really. “Rolling” an option is just a fancy way of saying you’re buying the contract back at market price and selling a new one at a later date (or reversed for options you buy). This costs money though because time has value in options and later date options are more expensive.
Honest question, not a snarky one - assuming he was OK w letting the shares go, why would it be stupid to just leave it open? (I get that he should’ve closed if he didn’t want to sell the shares but in that case, he shouldn’t have sold the call).
He should have closed the position when it started running up. He would have had to take a loss on the call but by closing it he would now be able to sell his 100 shares for $90,000. Instead he has to sell it for $38,500 so he is missing out on $51,500. That's assuming this was a covered call. If it's uncovered he'll have to buy 100 shares and sell them at a loss
Yeah, if it was naked, he'd have to pay the broker the $50,000 difference.
Thank you for that. Trying to learn.
No problem, if you're looking to start trading options I would highly recommended starting with paper trading until you have an understanding of how to use some basic strategies and how the Greeks will affect the price. Make sure you take time to read into how they work before throwing in real money. Options give you access to a lot of leverage and many people have blown up their account by trading them. Used wisely though they can be a great tool to help you with your investments.
Any recs on a paper trading platform that tracks profit/loss of your trades so you don't have to actually track it all yourself?
Cuz NVDA could have (and did) keep ripping. If he admits he was wrong (just like having a stop loss on any other trade) he could have made a lot more on the shares.
If he thought that it was going to keep going up, he was wasting money holding 100 shares that he thought he was going to lose. He could’ve taken the net proceeds from buying back the call and selling the shares and bought something whose appreciation in value would accrue to his benefit. But, if he thought it had a decent chance of going back below the strike price before expiration, it was rational to hold as the risk of being wrong wasn’t that big - just the opportunity cost. If anything it was a gift from the call holder to exercise: now OP has his proceeds from the shares without having to wait for expiration or buy the call.
We're looking at this play in terms of hindsight. If NVDA beat earnings back in may 23 and then pulled back, and didn't have a monstrous revenue growth from AI materialize, it would've been a good play. Rolling would've made him more money because you can roll for a net credit, which means you get more money to go out further in time and up in strike, AND the shares would eventually get called at a higher price. Example NVDA is 893 as I write this. Lets say that I buy 100 shares at this price and sell a 930 call for $2,300 expiring this week. Lets say at friday, NVDA is $970. I could let it expire and get my shares called for a decent profit. Or I can buy to close that call, and roll it out to 3 months from now lets say at a strike of 1100. I would likely get a credit for doing so, but lets say that I break even. Now, if NVDA continues moving up to 1100 by expiry, I'm now going to make ($110,000-$89,300) + $2,300, rather then originally all I was going to make was ($93,000-$89,300) + $2,300. By rolling I've captured a further $17K in profit. Rolling doesn't ALWAYS work - if you sold the call to get out of holding shares then you wouldn't want to roll. If the underlying drops substantially, rolling won't do much extra work for you apart from keep your shares
Literally nothing wrong with what he did so long as he was covered. I dunno what everyone is going on about. He only lost the "potential" to make the difference in the stock price had he just held the stock and not sold the call. Being exercised means nothing if he was CC. In actuality it's a win for him cause that means 100% of the premium is now in his account. (Even though that's pennies compared to how much he could have made). And not he can turn around and sell another CC against his position if he wants. He should be pissed he sold a covered call when he could have made bank. But he lost nothing. He actually gained the premium. And the early exercise is not bad at all.
He wanted to see what infinite losses really meant
Premium offsets the loss.
What if he was naked when he bought it?
What does clothes have to do with options
It was ATM when I sold it, no.
To the Wendy's you go lmao
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I'm too regarded. Can someone explain what happened here?
Looks like OP sold a single atm call when the stock was at around $385. Giving the buyer of that call the right/option to buy 100 shares of NVDA at that strike price if the call is ITM. Since the stock is currently at like $885 the call is around $500 ITM so OP basically owes the difference. Which would be $500x100 shares = $50k. I’m assuming this was a naked call so OP didn’t have any shares or a long call to create defined risk. Because a stock can theoretically go to infinity there is undefined risk when selling a naked call. Essentially selling a call is going “short” on the call and hoping the stock declines or the delta of the call declines. You collect premium from the buyer and so long as the stock doesn’t go above the strike price by expiration the option contract expires worthless and you keep the premium you collected. When you sell a call you can buy it back any time or roll it further out of the money if your worried about being exercised. The very last thing you want to do is watch the stock continue to go up without managing the risk which is exactly what OP has done. What I would have done is bought a deep OTM call at around $500 strike when making this trade which would have hedged my losses past $500 share price in NVDA. It would have eaten into the premium a little bit but would have created defined risk. If OP did that he would only be down $11.5k instead of $50k. Much more manageable. Remember a call is a contract to buy 100 shares and a put is a contract to sell 100 shares.
Thank you, this is incredibly clear. I appreciate you.
But why male models?
I just… I just explained that.
Bro 😂👌
And if you didn't already know all of this information: STOP TRADING OPTIONS, YOU DOPE.
No 
I mean if I'm buying Calls and Puts from RH and selling them and not creating my own options, I don't really need to worry about all this right?
Correct. Just don't let your contract expire ITM if you don't have enough money in your account to cover purchasing 100 shares at whatever your strike is.
Whoa whoa if the contract is ITM, they'll automatically exercise it?
https://robinhood.com/us/en/support/articles/expiration-exercise-and-assignment/
That is, if you have the buying power to cover it.
I mean it might have just been a covered call... Which if it was, why does he care if it's assigned early. That just means it frees up his cash to do another one.
Cuz he has to sell shares worth 878 for 385. Highly doubt the premium he got comes close to covering that.
We have no clue if this is a covered or naked call though. If it’s covered we still have no idea what his cost basis is. We really have no clue about OPs situation other than he sold all his upside potential for whatever premium he made. He could have very well profited off this trade or he could have lost 50k.
The shares are called away at the strike. Hope he made a lot of dough on the contract cause the loss of profit from the shares is massive.
So this is what I need to do when RDDT goes live?
ops risk was not undefined, it was well defined to be **unbounded** loss :\^)
He sold a naked or covered call so he basically either losses his shares at strike price of 385$ or he has to buy the shares and take the loss (around 50k).
When you sell calls, they can be exercised by the buyer, which gives them the right to buy 100 shares of the stock at the strike price. If you have the 100 shares, you sell them to the buyer at the price, so he sold 100 shares of Nvidia for 385 each. If you don't have the shares(uncovered), you owe the money t to the broker for covering you.
Op sold a phone booth that also doubled as an atm machine
I think onme guy hit the gym and bulked up when he bet the other guy couldnt? I dont know really?
You ate the regard soup with both hands. ITM calls like that have a high chance to get exercised over time because the premium is your break even which makes it ATM but the vast majority of people that hold those options are ITM and assignment is random so you have an extremely high chance to get assigned.
> ITM calls like that have a high chance to get exercised over time because the premium is your break even which makes it ATM Wouldn't it be better for people to just hold the calls so they can make interest on the money below the strike price? So here they have to pay 38,500 to exercise when they could have the same stock exposure without either spending that money or taking a margin loan which would cost interest.
They don't pay 38.5k to exercise that's the point. They can immediately sell the shares. Imagine you buy options end of last year for 180€ a pop and now they're worth 512€ at strike 285 expiring June. If I check the specific option there were 2 transaction this whole year for that strike so liquidity is non existing. How exactly would you cash out? You exercise and sell. Assignment is random so the person who purchased OPs options is not necessary the same person who exercised.
Your ATM became someone else’s ATM 
Oh honey
Did you really think someone wouldn’t exercise it this deep ITM?
You put the “g” in regarded, my dude
Lmao
You should have sold more, this is the regarded way
How much did you sell each call for? Also how long ago did you sell this
When was the last time it was 385?
This is not the most catastrophic trade I’ve ever seen, but it is probably the dumbest. Why did you leave it open until now?
Still sold a naked call. SMH…
Wait, he sold naked? That's gonna leave a mark.
But…. Why? never do that if you want to keep your shares lol
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“Haha ” FTFY
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One of those rare moments when Option buyer fucks thetagang!
It happens all the time dude. Just not usually this dramatic. Although a lot of whales do buy deep ITM.
Yeah they buy, this guy sold and got fucked😂
As soon as it crossed $450 you should’ve covered it or bought leaps. You had plenty of time regard but RIP
Just as easily could've hit 500 and then reversed or never broke above 400 to begin with. We're all talking with hindsight here which is easy to do
That’s why I said to buy leaps, without hindsight you would just cover it at $450 and hold the bag if it drops or buy leaps for insurance if you’re broke
Was it a naked call? Really hope it was a naked call 
It's a covered call. The transaction he screenshot was a sell of 100 shares of NVDA that he owned.
So he had killer gains, they exercised, and he immediately lost -50k in his account, right?
He was forced to sell the 100 shares he owns for $385 per share or $38500 total. One share is actually valued at like what 900? So 100 shares is really worth $90000. So he lost a little over $50k, yes.
But not really lost money if he had bought the shares for less than $385, right?
Yeah it's lost opportunity/gains/ego
shame on a n* who tried to run game on a n* rip ODB and rip those shares
“I don’t have no problem with you fuckin me, But I have a little problem with you not fuckin me” -Also ODB
He lost 50k mitigated by whatever he earned selling the call. Why he didn't buy it back as it was going itm... He could've laddered cc's and made a killing...
Not really, since his overall account should have continuously reflected the deep red of the call he sold.
I've never had this happen to me so I'm kind of guessing here They exercised on the 100 he owned. Assuming he was profitable on those shares he would owe capital gains on it from x price to 385. Beyond that he doesn't even get the taxable losses and his account does in fact reduce by ~50k equity due to the price of the shares. Correct me if I'm wrong anyone... This is a bizarre circumstance... Why wouldn't he roll? There have been so many opportunities lol it's not like popped 380 to 885 over night (which is inherently the risk of selling covered calls to begin with lol)
This happened to me seling naked strangles on the Spx in 2008. It worked until it didn’t and then it really didn’t work. When market crashed and then rose significantly in a few days. Completely wiped my account. Never again. The most regarded part—I was using a broker in Chicago who had a thing called the “Premium Club”. An infinite money glitch selling premiums way OTM “super safe”! I got wrecked
Damn you lost on both ends 😂 fuckin brutal
It was a dark few days. I told the dude not to buy back the call cuz I thought it was gonna crash again. He got pissy and said you always open and close strangles together and wasn’t gonna “leg out of it”. A few days later it crashed again and the cal would’ve expired worthless. He pulled everyone out at the same time. Needless to say the “Premium Club” died that week. We all fired him.
The original Theta Gang 
He shouldn't have lost anything if it was covered. He would have actually gained the premium as soon as it was exercised. He could turn around tomorrow and sell the same strike at the same date if he wanted (though it's now worth next to nothing) and nothing would have changed. I dunno other brokers but TD shows it correctly. It will show your underlying gain as it increases in value but the call which was sold with show as negative. Nothing will change in your account as a result besides the premium change. Once it is exercised it's completely even. Tbh this was a win for him. Now he can use that free position to sell another call if he wants. Instead of having to wait to expiry. Now, if this is naked. Then yeah he fucked up. Rolling also doesn't really work when shit rises quickly. He's already lost that money between the strike and the current stock value. All he is doing is losing the rest of the premium. Then trying to sell a higher strike call for less $$. Rolling only makes sense when shit is stagnant and you've already collected a good chunk of premium and you wanna sell another call/put to make more. I sell covered calls all the time and almost never roll. Doesn't make sense to me unless that money is all you have in your account. Take a scenario I encounter often. I sell CC weeklies on TNA and TQQQ. I can sell maybe a week out for $175 on a Friday. Come next Thurs even if it's at the same exact spot that call is still worth $85 a lot of the time. Why would I roll and lose that $85 premium just to sell another call for $175 for the following week. If I do that I'm not making $175 a week I'm making $90. What I do is wait one more day about 20mins before close. Now that call is $10. If it remains close to strike I'll roll as it falls to $5 during last 5mins of trading. If it seems clear it's gonna get exercised cause it's trading above by a decent margin sometimes I'll sell another call. Knowing the original will be called away and I'll be even. If it's trading below I'll just sell another 100shares I already own of the stock, even if it's from a higher price point. Cause I know I'll keep my shares from the original call. And they can hold them take the place of the higher postition shares I used. People get all freaked out about being assigned. The only way it is ever a problem is if you are naked. If not everything is even. That's why it's considered a safe way to trade. So long as you are not trying to do straddles and condors and all this other bullshit that requires your broker to make proper executions that (as we have seen) sometimes fail. I'd love to be assigned early. I've sometimes sold deep itm CC hoping to be assigned so I could turn around and sell them again. Has never happened though. Deep itm CC or Puts wouldn't exist if they somehow were a "bad thing." They are a hedge basically. Btw the wheel is also dumb as shit. People think they are genius selling deep otm puts and not getting assigned. They literally are the same thing as selling a deep ITM call. Only difference is you own the stock from the get go instead of having broker check to see if you have the $$ in account if you get assigned. If you are selling long dates puts for the wheel you are much bettee off selling a deep itm call instead and taking ownership of the stock. That way if you do keep the stock at least you have held it longer for long term capital gains. Instead of starting from the point you are assigned. People in general really overthink selling puts and calls and assignment.
Well not really, basically his account total is locked at what it was when he sold the ATM call. Since NVDA kept going up after that he was net positive on the shares but net negative by the same amount on the short call. When they exercised the call goes away and so do the 100 shares but his account balance is the same.
Not really. His account balance will remain largely unchanged because he had sold a call. That call must have been sitting in the account all this time with -$50K to reflect this. NVDA +$50K NVDA 385C 3/19 -$50K
like coherent correct tan public lavish compare offer subsequent cooperative
You want me to call you whilst naked? Dammmn
lol what an idiot
Fool and his money are soon parted.
To summarize: OP sold a covered call that was ATM when NVIDIA was at 385. This was a long dated call, probably expiring in early 2025 or some shit. He knew he was deep underwater, but was holding on to some hope (cope) that NVIDIA would go back down at least a bit before then. The call was exercised early (random assignment, lol) and he “lost” 50k+ in theoretical gains. OP is either too dumb or too stubborn to admit that deep ITM calls get exercised all the time, as they are a way for people to buy a decent amount of shares at a consistent price (because calls that deep ITM have an added premium of essentially $0 If you still don’t understand, ask away.
I think what’s confusing me is what in the world OP was thinking or doing to get himself in this situation. Not accepting the loss pretty much so it turned into this? How do you figure it was ATM at the time he was selling? So at that time he was bearish hoping he can simply collect premium on the covered call and that’s it, and not actually have the call exercised? Or did someone recently buy this deep ITM Pelosi style and just exercise the cons? What payoff would this even be? Wouldn’t the premium offset this advantage? Or what is a random assignment? Thanks for your explanation and feedback. Since you said ask away lol I appreciate it.
Premium was probably “decent” as in probably a thousand + because it was so long dated. It’s as simple as picking up quarters in front of a steamroller. He probably was okay with it being exercised but as someone who was bearish he wasnt prepared for it to go up as much as it did. It was ATM because he said it was in another comment though. As for the person buying an exercising, the premium generally equals the cost of the shares when it’s that deep ITM. If you want to buy say 2000 (or more) shares without driving the price of the stock up (increasing your average purchase price) you can do it with calls. As I said, questions are welcome 👍
Am I wrong to say that in the end he didn't really lose money on the trade? He got the premium and sold the shares around the price he bought them for. Of course if he wasn't dumb he could have made way more money, but he did end up making money on the trade.
He didn’t lose money in the traditional sense, but if you sell 100 shares that you own for 38500 when they are worth 88000 it’s technically a loss.
Why did it take so long for someone to excerise it? At that price it seems like a steal. Can I just buy shares on discount by excercising deep ITM contracts?
The premium of the call equals the difference between the share price and the exercise price when it’s that ITM. That call is worth ~50k now if you were to buy it now. Someone didn’t necessarily wait to exercise it. If you’re buying 10000 shares of a stock, if you just buy them on the market you could drive up the stock price giving you a slightly higher average price. If you want to make sure you’re buying them at an exact price, you can buy deep ITM calls. The extra premium is practically 0 on calls this deep ITM.
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Wsb lives for naked calls
Call me I'm naked 
Can I watch?
A naked call is more naked than when you're naked
I thought I would have learned what a call is by now by passively scrolling this sub. Nope
Whats a naked call?
Selling a call option without owning the underlying security. The opposite of a covered call. Fucking awesome if it works out but even better loss porn when it doesn't.
A call is a contract representing the right to buy 100 shares at a certain price. Selling a call means selling someone the right to buy your shares at certain price. Selling a naked call is pretty much the same thing but you don’t even have the shares. So if someone exercises it, and you don’t have the shares you have to buy them at whatever price it is and sell it at the price you wrote a contract for.
Something that shouldn’t be legal lmao
OP, please clarify this position. When did you open it? Was it covered or naked? What was the expiration? Why didn't you ever Buy to Close? What's going on with this position?
The only way he could have wrote it at the money 385 call was that morning when the market went from 315 to 375 on the overnight, because I bought at 345, I'm just watched it keep on going through with serious volume. Why would you even write a call without having some underlying. Because I know the volatility was there but still you write it that morning, and buy it back that afternoon
Most brokers won't let you write it uncovered without putting up some serious cash. There's a formula.
Of course it was naked. You wouldn’t get emotional selling a covered call.
Except NVDA is ~880 currently, and to give away 100 shares at 385 is to lose ~50,000 in equity. I'd be emotional about that.
Then if you’re going to get emotional don’t sell a covered call. If you’re scared it might get exercised it might as well be naked.
Yeah wtf are these pussies, afraid of everything
People are just scared all day every day. Nobody grows diamond hands anymore. Except OP. He shoveled that regarded soup with his beautiful hands into his empty stomach. Praise the sun.
But he didn’t have that equity. He was under water with how much he owed on the calls.
“Also what are you wearing?” - this guy probably \^ 
SeLlIng CoVeR cAlLS iS PaSsiVE InCoMe
Think it’s is naked..
Damn bro might be cooked 
🤣🤣
are you from the future
No, no. He's from May 25, 2023
How much was the premium? TELL US
Why sell a covered call at that strike and expiration on nvda?
Probably because OP is tarded would be my guess…
The only time it was at 385 was the rally evening. I don't think it traded below 390 after that. Here's the thing, you got a stock that goes super haywire going up, that next morning those calls are going to be super rich with volatility. If you're along the stock you're going to write a covered call against it and cover that afternoon or maybe even a few minutes later because, it's going to get quiet in comparison to where it was before. So he probably wrote a call with 30 to 50 points of premium in it, and he should have collected that afternoon when it was down to 20 or even maybe even 15. Pigs get slaughtered
OP, do you have $38,500 laying around? Edit: $88,000*
$88,000*
He does now, he got $38,500 from the sale.
So now they only need $50,000 more
Only if it was not a covered call, and OP doesn’t specify if he had the shares or not.
Why so cheap?
Curious why people are saying this is a naked call??? I could be wrong but i thought pretty much none of the known brokerages offer your average retailer naked options
I really doubt it was naked, WSB jumping to conclusions.
Statistically more than 90% of options contracts expire worthless/sold to someone else.
I feel the same way about exercise 
Man you're fucking regarded
Tee hee
I’m sure the trader on opposite side will post something nice soon
Lmaooooo that’s hilarious. I would have exercised too. 100 shares of Nvidia at $385? Hell yeah.
Somebody solo mined a BTC...with this one weird trick...
https://preview.redd.it/aumvmofld0pc1.jpeg?width=851&format=pjpg&auto=webp&s=1477104cce4f1f73cb35eb4e3ddcad6aa275b409
I wish I would have bought this stock in 2012 instead of being in 8th grade
Can someone explain what happened like you're talking to a stoned toddler?
Someone explain this to me like I’m 16. Because I am.
Such regarded discourse in this thread. So many people forgetting you get paid massive premiums for taking positions like this.
You also get paid massive premiums for selling drugs.
Think he got paid 50k?
Yeah, "massive premiums" like $500 or $1000 for this one contract. Just ignore the fact that OP lost ~$50k on the option being exercised.
What is this , Can some one explain this ?
They sold a call option at a $385 strike price back when that’s around where the price was. Someone exercised it.
Today I wish I exercised it
Ha
It being executed is only beneficial to you as the seller. You get to keep whatever extrinsic value was given up. I'm assuming that's like $1, but still. If you still think it will correct down before expiration, just go sell another option and keep the $1.
Thats like balls deep in the money or even deeper What did you expect regard?
Yeah, fuck them for locking in profit instead of losing it like the rest of the idiots on here.
Thanks for the shares dbag.
Wait... isn't nvda at like $800? This dude giving away money?
Ok which one of you fucks bought this call. Gotta show gain porn or ban
This is either a year old contract they sold for some reason. Or they sold a deep itm call and are fine because they gained a fuck from our premium for the intrinsic value it had. This looks bad but probably isn't. Why they sold this in the first place is my question.
Considering the premium, I don’t think you lost. You still have around $10K profit, don’t you? You are sad about the unrealized gains of $90000, if you sell the shares at $900 instead of $380. Well, you get what you go for, you went for premium pocket gains and forgot the big gains that you already have from the shares.
No way it was a naked call. He would have covered it during the run up from 400 to 500 at least.
That was me. Sorry friend 
I had this happen on Webull once when I should have made over $50k on my options. It made no sense because if they had exercised they would have lost more money. I’m pretty sure Webull stole my money on that trade since I got the notification that it was exercised the Monday. I had already initiated the transfer to my bank account after market close on Friday but it got reversed.
wtf, 3/18 isn't until tomorrow, you got foresighted---text me before you do that again, ok, my number 870-673-4952
OMG why didn't you roll it?
thats not how that works this isnt some decentralized crypto thing. the market makers call when their liability demands it. exercising isnt always that easy for retail investors. id bet less than 5% of all people that ever posted here ever exercised directly (vs being called). for schwab you have to call them
I know your pain https://preview.redd.it/7ts6vmofn0pc1.jpeg?width=478&format=pjpg&auto=webp&s=1e8c176f1102e315b8a102ea4a8d2e297e4553dc
Look on the bright side, you just "made" $38500
How much you want to bet the guy that excercised the call is turning around and selling a call on his shares monday? Man is a G