Friday, August 28, 2015

What Put Option Assignment looks like via Questrade. $X TMX Group + $CWB Canadian Western Bank (August 21, 2015)

On August 21, 2015, I was assigned two different stocks via Put Options I wrote on them.  The prices of these two on August 21, 2015 were well below the strike prices:
$50 TMX Group, Closing Price: $45.89. $4.11/share loss.
$28 Canadian Western Bank, Closing Price: $22.25. $5.75/share loss.

While there was an automatic paper loss upon assignment; the loss was cushioned to an extent when looking at the premium.

My choice to avoid assignment would have been to Buy to Close (buy back) the Puts I wrote.  Even so, looking at the cost of buying back it would have been a greater loss than the assignment; not including the commission.  Also, I would end up with no share ownership.  One reason why you might want to buy it back is if you cannot afford to cover the total cost of the shares.

*Take the Ask Price because this is the first available price that someone is offering to sell back the Puts.

Historical X 50 Put information:

$50-$4.25=$45.75,

Month / StrikeBid priceAsk priceLast priceImpl. vol.Open int.Vol.
15 AUG 50.0003.8504.2504.250--10

Historical CWB 28 Put information:

$28-$5.90=$22.10

Month / StrikeBid priceAsk priceLast priceImpl. vol.Open int.Vol.

15 AUG 28.0005.7505.9005.900--300


Calculations:
$X TMX Group
Strike Price: $50
Premium: $0.85 (x100 shares)
Option Commission: $10.95 ($9.95, +$1/contract)
Option Assignment: $24.95

Total Cost: $5,000-$85.00-$10.95+$24.95= $49.509
Average Price: $49.509


$CWB Canadian Western Bank
Strike Price: $28
Premium: $0.45 (x300 shares)
Option Commission: $12.95  ($9.95, +$1/contract)
Option Assignment: $24.95

Total Cost: $8,400-$135.00-$12.95+$24.95= $8,277
Average Price: $27.59


Date Symbol Type Expiry Strike Quantity Avg Share Price Gross Commission Net Return Net Amount Exposure Status Type
2015-07-21 X Put 08/21/15 50 1 $0.8500 $85.0000 $10.95 $0.7405 $74.05 $0.00 Assigned Covered














2015-06-26 CWB Put 08/21/15 28 3 $0.4500 $135.0000 $12.95 $0.4068 $122.05 $0.00 Assigned Covered


This is what it looks like in the Questrade Account Statement:

Entry 1: Assignment of the Put(s)
Entry 2: Purchase of the underlying shares.

In the trade screen, which I did not take a screenshot of, the option is removed from your holdings the next day.  With my other brokerage BMO Investorline there is a couple day delay; I assume as the trade clearing is completed.

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