r/thetagang
Deep ITM MRVL Puts Not Assigned?
Sold deep ITM MRVL puts with full cash but wasn't assigned; confused by voided instructions and missing premarket gains.
Sold 12 cash-secured MRVL $275 puts that expired Friday (6/5).
MRVL closed at approximately $263.37, so the puts finished $11.63 in the money. Since each contract controls 100 shares, assignment would have meant buying 1,200 shares at $275 for a total cost of $330,000.
I had the full cash secured in the account and fully expected to be assigned. However, by Sunday I still hadn’t received any shares, assignment notice, or cash debit. I contacted Robinhood support, and after checking the position they told me:
“Assignment instructions were voided and expiration instructions were confirmed. So no shares or corresponding debits will appear in your account for this position.”
What’s confusing is that a holder would have been giving up about $11.63 per share of intrinsic value by not exercising. Across 1,200 shares, that’s roughly $13,956. It seems extremely unusual that deep ITM puts would not be exercised.
To make things even stranger, MRVL is now trading around $287 premarket Monday. If I had been assigned at my effective cost basis of about $274/share (after premium received), I’d be sitting on roughly a $14,000 unrealized gain.
Has anyone ever seen assignment on deep ITM short puts get “voided” like this? Is there any scenario where this is normal, or should I expect shares to suddenly appear today?
Didn't MRVL jump after hours to like 280? I believe the time for options is not the time the market closed.
Either that or the buyer requested it not to be exercised.
Here is the basically weekly lesson that contract holders have until 1.5 hours after market close to manually override the automatic assignments based on closing price.
Because MRVL spiked above $275 at around 5:20 pm on Friday, those long the put contracts can decide not to exercise them.
Is there a way to make this decision on Fidelity without calling them?
Options don't expire on the close, pros/mm's have 90 minutes after close to submit the DNE. You can see about 15 mins before the cutoff it was trading around the 275-280 mark.
Closing price is not what matters. It pumped in AH.
Well… I’m not sure how lucky, I’d be about $12 for each share in profit right now, I kind of wish I got those shares lol
But now the person on the other end of the trade is now richer $12 per share. Makes sense that they didn't exercise
If you had the conviction, you could have "self assigned" to ensure getting the shares. I do that with some frequency on CC that are ITM and I want to ensure the shares get sold.
Not the same as assignment. Close enough though.
Hence "self assigned" in quotes. 😉
Yup. I took it a little too literally and was not sure what's up. 😄
Yes, close enough. But OP can smoke a cigar now.
Options are settled based on the price at 3 pm CT. They are auto-exercised if they are ITM by over 1 cent.
They can be manually exercised until 4:30 pm CT.
Stocks are traded after market hours so an OTM option can become ITM and the holder can manually exercise until 4:30 pm CT.
An ITM option can also become OTM and the holder can execute a “Do not Exercise” before 4:30 pm CT.
MRVL went up above 275 at about 4:15 CT. The 275 Put is kaput. Holder DNE.
Some options are exercised or not exercised for reasons known only to the holders.
It’s not over until the fat lady sings.
Close all your positions before 3 pm CT to avoid any possible surprises.
I had some ill-advised UPST short calls that were in the money at close that didn't get assigned. It was pretty much the same deal as your MRVL trade, they went out of the money (briefly in my case) after hours. I called Schwab support on Sunday and they confirmed I was not assigned. There's no way to know for sure why you're not being assigned in this instance but most likely the market makers didn't exercise their long puts at that strike when it went out of the money shortly after hours.
Buyer probably asked for no exercise because the odds of S&P500 inclusion were high.