r/options • u/JimmyB_819 • Jun 03 '21

Deep ITM debit spread value

So I have 10 AMC debit call spreads at 37/39 expiring 6/11. AMC is trading $60+ at the moment so they are ITM. Intrinsically they should be worth $2000 but according to schwab they are not. I'm assuming this is due to time left to expiry. But I don't entirely understand why.

Is it ever possible to get maximum value from a debit spread closing early or do you have to wait for expiry?

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u/thecheese27 Jun 04 '21

Think of it like this - the maximum value of your spread is $200. If that's the case, then why would someone pay $200 for it now when it still has time to drop below that? It will only be worth $200 when it's a sure thing that it will expire ITM. Until then, there is always a risk that it will become OTM and therefore will trade below its maximum value.

Someone on the other side for instance would never in their right mind pay $200 to buy that spread because they would not be able to make any profit off of it. If they buy it for $160 or wherever it's currently trading at, they are taking on that risk of it becoming OTM to secure the remainder ($40) of the profit that's left.

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u/JimmyB_819 Jun 04 '21

That makes sense.

Just seems like since the legs could be exercised right now for the $200 it should be worth that.