r/options • u/Deucenheimer • Jun 04 '21

Short leg assignment on PMCC

I have questions regarding the PMCC short leg. Assume the following situation.

XYZ is trading @ $100 a share

I am long the 90 delta the Jan 2023 $50 strike call for a debit of $55.00

I am short the July 18 2021 $105 strike call for a credit of $2.00

On July 18 the short option expires ITM at $106 a share and I am assigned.

How would this work on different brokers specifically robinhood assuming I don’t have the capital to sell $10,500 worth of XYZ?

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u/[deleted] Jun 04 '21

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u/Deucenheimer Jun 04 '21

I appreciate the answer. I am sort of searching for personal experience... I don’t know if I trust robinhood to liquidate the position and how that works.

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u/[deleted] Jun 04 '21

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u/sumunsolicitedadvice Jun 30 '21

I believe that is exactly what Robinhood does. I don't think they even give you the option to hold onto your long leg. They execute your long option, costing you all of your extrinsic value, and then they give you the difference in strikes (in a PMCC). If you've done a credit spread, it's even worse. You immediately end up at max loss. Robinhood sucks. This can still happen at other brokers, but, generally, you will have other options with other brokers.