Hi folks,
I’m learning to trade spreads and trying to scale one of my strategies. I’m basically trying different vertical spreads.
There are two things I could try to make my strategy work:
1. Go for OTM (sell/buy) calls and OTM (sell/buy) puts
2. Go for OTM (sell/buy) calls and ITM (sell/buy) calls.
My strategy works only if I wait until the expiration and I’m trying to see which is the better option to avoid assignment.
I can try option 1 where the assignment is unlikely since both calls and puts are in OTM but if the put goes into ITM, I might get assigned.
For option 2, i can completely avoid puts but my calls will be in ITM. I’m not clearly understanding how the call assignment works. I understood the put assignment. What would happen to my account if I get a call assigned? Also would a call assignment happen only during dividend?
It would be great if you can help me understand how the assignment works. For few contracts it’s fine, but if I scale up, I might be playing with a few million dollars if I get assigned and I want to make sure I fully understand before I execute.
Thank you!