Friday, July 27, 2018

Why the early assignment of a DIA call against me?

Despite my vigilance against early call assignments (see my previous post), I received one on 7/19/18, the day before option expiration Friday.  On 7/2/18, I had sold the DIA July $245 call against my DIA shares, when DIA traded for $241.03.  (DIA is the ETF that holds the 30 stocks of the Dow Jones Industrial Average.)  On 7/19/18, DIA closed at $250.79, over $5 in the money.  I had planned to visit the position on 7/20/18, option expiration Friday, to consider a one month repair (roll out) to an August call, to avoid the July assignment (e.g., buying back the July $245 call & selling the August $253 call).  When I visited the position on July 20, I was surprised to find that my DIA call had been pre-maturely assigned the night before, forcing me to sell my DIA.  I had presumed that DIA's ex-dividend date on its 32 cent monthly div was August 1.  However, DIA goes ex-div on the 3rd Friday of the month (July 20), & I was assigned the day before, ensuring that the buyer receives the div along with the cheap ETF.           

1 comment:

  1. Thank you James for the kind words & pardon my delayed reply to you. You might enjoy today's post. Don't hesitate to comment & share. Retired from Fidelity for 4 years & missing work a tad, I may begin teaching option selling.

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