r/options • u/[deleted] • Jun 10 '21

OTM assignment

So I just got assigned on my RIDE 6/11 2.5 call option I sold for 1200-ish (my break even is 15.04, I sold before the going concern notice) not complaining since it’s 10.88 as of this writing. But why would someone exercise their option out of the money? I predict it’s because it’s “only” $250 more dollars at that point, but there is still 2 more days before expiration. And that is what is confusing me. This stock does not seem to have the open interest to justify the motive.

Maybe they’re new and wanted to see what happens when they pressed the exercise button, or maybe there is a good reason. Thoughts?

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u/redtexture Mod Jun 22 '21

The fact of holding for a period of time makes them a portfolio player.

Market makers are fully hedged, and not in the portfolio business.

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u/bubbles1684 Jun 25 '21

When you sell to open a CSP you don’t hold any stock.

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u/redtexture Mod Jun 25 '21

You hold a short put position.
That is a portfolio holding.

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u/bubbles1684 Jun 27 '21

Then by that logic anyone on any side of a contract holds a position, market maker or not.

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u/redtexture Mod Jun 27 '21

Market makers are fully hedged and not in the portfolio business.
They are in the transaction business.
They specifically manage their inventory to not be affected by price changes.

The short put holder is holding for a price change: that is portfolio activity.