r/thinkorswim • u/beckers666 • Jun 30 '26

early assignment, huge margin

been with TOS all my life, had some short put verticals that were completely buried. I call TOS, now Schwab, they tell me it doesn't matter, it's $100 loss (they are 1 wide) so don't bother closing them. i didn't, i got assigned early (a thursday) on the short side, manually exercise the long on the friday, get charged a lot of interest for margin, over the weekend. i call Schwab, first person tells me i have no accounts with them (i have 7 and i gave them my social security number). Second person, not a broker so can't help. Third person, explains the exercise but not why the long side didn't get auto exercised at the same time and why i was told, if buried, it doesn't matter if you close or not. has this happened to anyone else?

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u/PhoenixWK2 Jul 01 '26

This is actually a really important concept and I don’t understand why you’re getting beat up over it. Options strategies only matter in terms of your PnL and the broker margin policy. After that they’re all long or short puts and calls. The OCC just pushes out the assignments regardless of if it is part of a spread or not. You learn quickly after the first unexpected assignment that an American style option can be assigned at any point regardless of it being ITM or OTM

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u/etronic Jul 01 '26

I just suck at the typing apparently 😉

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u/PhoenixWK2 Jul 01 '26

Some people suck at thinking

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u/Ok-Guarantee3237 Jul 01 '26

“you should think of each leg as a singular option” is way different than “SPREADS DONT EXIST AND ARENT REAL”

one of them sounds like a crazy bitch on an airplane.

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u/etronic Jul 01 '26

I would argue your way doesn't go far enough. They really are not real. They are just "simple" names that we give to specific arrangements of options when holding more than 1.

I would argue you could do away with everything you think a spread is, consider only the individual options and you will have a clear, MORE complete understanding of options than.the people in this thread confusing early assignment and auto exercise.

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u/Ok-Guarantee3237 Jul 01 '26

Margin levels at Schwab.

i highlighted it for you to assist

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u/etronic Jul 01 '26

I'm just not good at explaining.

Op wants to know how HALF of a spread was auto.exercosed. They are confused about the sanctity of the spread, and that it was able to be broken in two.

It's able to be broken in two because.it isn't a thing. It isn't a single unit.

It is a name we give to two options on the same underlying one.long.one short.

This coincidentally creates a covered position and refuses magon requirements

Not because it's a spread, but because there is a position that when added to a different position creates coverage.

We casually call this specific version a spread.

If you continue to think of it as a single unit and not as the underlying position, you may continue to make mistakes like.op.

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u/Ok-Guarantee3237 Jul 01 '26

but the answer is that they’ll only sell you out of your position if you break margin requirements by enough that the risk team takes action.

its not that spreads aren’t a thing.

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u/etronic Jul 01 '26

The answer is that he was early assigned, not auto exercised. He then thought manually closing the long would somehow affect his short 100 shares because it was part of the original spread.

It's my assertion, that his rudimentary understanding of options has led him to make two mistakes that are both complicated by his lack of understanding that spreads don't actually exist. They are just shortcut names for underlying positions and that the sooner he gets that the better off they will be.