Something odd happened to me earlier this week. I’ve been selling puts on OXY each month since the beginning of the year. So far, every time they’ve expired worthless. But oddly, earlier this week, someone exercised them and I was assigned. Now that isn’t a bad thing because it turns out the the stock is up more than a dollar since then, and considering the premium I received, it is a great deal for me. Especially since I am purposely accumulating OXY shares.
My question is, and the odd thing is, why on earth did anyone exercise those options? They literally lost money the second they chose to do it. Because the price of the shares plus the price of the option was higher than the price they got from me! They could have sold their shares (the ones they put to me) at market price, and sold the option at market price, and received MORE money that way. I don’t get it.