If you sell put options long enough you will eventually end up being assigned shares when you least expect it or want it. Most stocks have periods when they pullback or break an uptrend and commence a downtrend. It is often during those times when put options that were sold suddenly end up being left in-the-money as the stock falls swiftly past the put strike sold. As the stock falls deeper, the chance of early assignment of shares grows.
This article is a continuation of the prior article looking at early assignment of shares on the day before ex-dividend dates. You can review that article through this link.
Being assigned shares is often a nightmare for many investors who never want to own shares but instead prefer to try to earn income through selling put options while continually avoiding stock ownership. It can end with losses taken and indeed wipe out weeks of profits if not months. For many investors who selling options for income, it is a “rainy day” when unwanted shares end up being assigned.
In a raging bull market, selling put options is much easier than in a correction, a plunge or worse, a bear market.
This strategy article looks at 5 strategies to rescue unexpected assigned shares caused by selling put options that ended up in-the-money. There are many strategies that can be used but here are 5 to place in your trading tool box to be used when the inevitable happens and you find shares sitting in your brokerage account that you neither wanted or expected.
These are the 5 strategies outlined:
- Strategy 1: Turn That Frown Upside Down
- Strategy 2: The Repair Combo Strategy
- Strategy 3: Taking The Leap
- Strategy 4: The Giant Stride
- Strategy 5: Leap Of Faith
This strategy article is 1600 words and will require 6 pages if printed.
This strategy article is for FullyInformed Members.
5 Rescue Strategies For Assigned Unwanted Stocks From In The Money Short Put Selling
Disclaimer: There are risks involved in all investment strategies and investors can and do lose capital. Trade at your own risk.