On this bull call spread at expiration….if the stock is trading above both of the strikes and you let the option spread expire,
do the two options execute automatically giving you the difference, or do you have to initiate your call option to counter the
one you sold here. In other words, does it all happen automatically.
As long as both legs are in the money (ITM) the exercise of the long calls would be offset by the assignment of the short calls. You’d realize max gain. However, the fee for exercise assignment may [typically] be higher than the commission to close out the trade, so when you reach expiration you want to consider closing the spread. Check with your broker on the assignment fees.
newbie question..
On this bull call spread at expiration….if the stock is trading above both of the strikes and you let the option spread expire,
do the two options execute automatically giving you the difference, or do you have to initiate your call option to counter the
one you sold here. In other words, does it all happen automatically.
thanks
As long as both legs are in the money (ITM) the exercise of the long calls would be offset by the assignment of the short calls. You’d realize max gain. However, the fee for exercise assignment may [typically] be higher than the commission to close out the trade, so when you reach expiration you want to consider closing the spread. Check with your broker on the assignment fees.