NOW WORDING IT CORRECTLY...
a question to anyone who is a regular stock options trader (actually more of a stock options writer):
Say, u r bearish on a particular stock CMP 100. So, u sell one lot of that's stock out-of-money call option at strike price 110.
But, your direction call goes wrong, and that stock turns bullish....
obviously, your 110 Call, which you sold/written, starts making loss....
soon, the CMP of stock reaches 115, and that call option becomes in-the-money, and u have STILL NOT SQUARED OFF THAT POSITION, THINKING THAT CORRECTION IS IMMINENT..
my question is:
have u faced such a situation where u did not square off such loss-making written stock option, but one fine day, u find that it has been "exercised" by your option buyer (who thinks that 115 is good for him to book his profits,, and exercise his right)...
is there actually a one-to-one connection between the two parties (option buyer & seller), with regard to THAT particular contract, in real, practical life....????
Has this ever happened with you before???
(I have purposely mentioned stock options, as in India, stock options can be exercised even before settlement/expiry day (last thursday of month) unlike index options....)
Don't look into figures in detail....
All I want to know that, has anyone ever faced this situation, when his non-squared off loss-making sold/written option has been exercised, and one fine morning, he finds it missing from his "net position" statement, because it has been exercised by the option buyer...???