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Why Short Options Are Rarely Exercised (Written Guide):
Beginner options traders have a very common fear, which is being assigned on an in-the-money short option before expiration. But that only happens if somebody exercises the option.
In this video, I break down why options are almost NEVER exercised, and therefore, you’ll almost never be assigned on a short option before expiration.
I use an AAPL call option example to illustrate why a trader would almost never want to exercise an ITM option. I do so in excruciating detail.
My goal for this video is simple: alleviate the fear of being assigned on short options, and clearly explain why you do not have to exercise an option to realize any sort of profit. The profit that you could make at that moment will be embedded in the option’s price, which is called “intrinsic value.”
I hope this video helps. Sorry for the seriousness, but this is important! I receive questions every day from confused traders in regards to exercise/assignment, and I want to bury this fear/confusion once and for all!
Be sure to leave a comment down below with any questions you may have!
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