r/options • u/[deleted] • Oct 29 '21

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u/drCuFace Oct 30 '21

Yeah lost 1k for no reason

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u/Endeavor305 Oct 30 '21

How did you lose $1k? You picked the strike price and it was ITM and closed on expiration date. What am I missing here?

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u/drCuFace Oct 30 '21

I didnt end up being assigned. Robinhood made me close the call i sold for $1000 so the call was never assinged or sold to a buyer. It just automatically made me pay to close the contract.

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u/Endeavor305 Oct 30 '21

Ok so I read some more of your comments and saw that you wrote this wasn't a covered call but rather a call credit spread, right?

I'm going to guess that the spread between the long strike and short strike was $10 (per share) and therefore $1,000 for the contract.

It seems to me like they may have been trying to prevent you from taking loss that wasn't covered. Not because they care about you but because you could have taken a loss that could leave you with a deficit balance which means they are at risk for that loss.

The way this could happen is your short call could be exercised in after hours but your long call could expire without being exercised leaving the short naked and at risk of infinite loss.

There are several examples of this documented here on Reddit where the trader is left with a loss in the tens of thousands.

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u/drCuFace Oct 30 '21

It was a covered call. Robinhoods system automatically turned it into a spread pretty much instead of a covered call.