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Strategies & Market Trends : From the Trading Desk

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To: August who wrote (4029)	1/10/1999 3:12:00 PM
From: steve goldman	Read Replies (2) of 4969

August, as per your questions: -in a non-margin account (eg. IRA), --long 100 contracts of calls $30 in-the-money (eg. strike 50, stock at 80). --also assume no other equity in the account. --one wish to exercise and sell the stock instead of selling the options out-right, due to lack liquidity and bad option bid price which are not firm anyway, a) can one instruct you to exercise the calls and immediately sell the stock (on the same day as option exercise)? Absolutely...that is a long sale, not a short sale. b) will such stock sell be treated as short sell (subject to up-tick rule), or will it be a regular sell? c) will non-margin status be a problem for exercising the call? Yes, you need the margin to purchase the stock at the strike price x 100 x number of contracts. 4) same account as 3) above, but the account owner did not give you instruction regarding the 100 contracts of calls on the Friday of expiration. What happens? **If they are in the money by more than 3/4 points, they are exercised automatically by the firm for you and OCCC regards, Steve@yamner.com

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