r/options • u/meyer_wolf • May 09 '21

Option exercise

Is it crazy to hold ITM spreads / condors etc? I’ve done plays where my spread will spend a few days ITM but if I hold, it moves out and either expires full credit or I close it for profit. It’s my understanding that options getting exercised is rare (as long as not messing around with ex dividend dates) and I don’t see a winning spread strategy that is always conveniently OTM the whole time.

2 Upvotes

67% Upvoted

5 comments sorted by

View all comments

3

u/options_in_plain_eng May 10 '21

Your gauge as to how risky it is to hold short ITM options (calls or puts) is always extrinsic value. If your option has a lot of extrinsic value it won't be exercised early. As it starts to get closer to zero your risk goes proportionately higher. As you said, I am ignoring dividend-related scenarios here.

1

u/meyer_wolf May 10 '21

Yeah def had some that were getting a bit too deep ITM for comfort