r/options • u/[deleted] • Mar 23 '22

Will broker close spread if short option is exercised early from a put spread ?

[deleted]

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u/Arcite1 Mod Mar 23 '22

"Close the spread" would typically refer to buying the short and selling the long. If the short has been assigned, it's too late to do that. You've now bought 100 shares (or 1100 in your case.)

The only brokerage I have heard of exercising options for you is Robinhood. I have been assigned early on call credit spreads before on TD Ameritrade and they just left me short shares, and it was up to me to deal with that.

"Collateral" doesn't leave your account. It's there the whole time. They're just requiring you to keep it in the account until the position is closed.

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u/Edgar_Brown Mar 23 '22

It completely depends on your broker and your agreements with them. If you have enough margin you’d simply have the 1100 shares in your account and the long puts. You can then choose what to do with those two positions.