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What can we do if we are in danger of being assigned?
We've been waiting for a week like this to happen. No one can predict the stock market accurately 100% of the time. Things happen. Despite Intel and Amazon making big news with growth in their areas, the stock market in general is on course to end lower this week. Our $1000 pick (WW) is well below our strike price. We are in danger of being assigned. What can we do?
We have at minimum, 2 potential exit strategies that we can use.
1) We can let the assignment happen. This means our $1000 will now be used to buy 100 shares of WW. We could then attempt to perform CALLS on the stock until it (hopefully) comes back up and we can get our money back.
2) We roll the PUT option out to a future date. Our money would still be tied up, but we would not have purchased the stock. If the stock pulls back up we would exit out of the transaction and recoup the money we invested.
Either of these options will allow us to make money along the way. It really comes down to your risk tolerance and comfort level. For the purposes of education, we will be letting the assignment happen. This way we can show how we can perform CALLS on a stock to make money.
But don't worry! We will continue to do our $1000 PUTS for everyone that is paper trading with us, or those that are new to our $1000 trades.
Remember in the stock market, these things happen, and we just have to be aware of the various exit strategies that are available.
