What is total marked wealth with 700 cash and 100 shares at 90?
Reveal the worked answer
9,700.
Compare total wealth with the original 10,000, not only the premium cash.
Core Options · OPT-06b · Core
Wheel: assignment and the stock ledger
What changes when the short put becomes shares?
What you will learn and prerequisites
- Explain the mechanism in the lesson question.
- Reproduce the worked comparison and recognize its failure case.
Read first: Cash-secured put, Covered call
Assignment changes the position from a short option into a shareholding and a cash payment. It does not forgive the underlying loss or create a bargain by definition. Keep the economic ledger visible so premium and share risk are assessed together.
Understand the mechanism
The put's contractual strike remains 95 regardless of the market quote. Economic entry after premium can be described as 93 before costs, but that is not tax advice and does not make 93 a market support level. The original business thesis must still hold.
Walk through the process
Record cash paid, shares received, current marked value and accumulated option cash. Reassess concentration and whether the new stock position is intentional. Do not start selling calls mechanically before evaluating the changed company and market facts.
A worked example
Continue the fictional ledger: cash 10,200 becomes 700 after buying 100 shares at 95. If the shares now trade 90, stock value is 9,000 and total marked wealth is 9,700. Relative to initial 10,000, the combined result is −300 before costs. The 200 premium did not make the assignment profitable.
Wheel: assignment and the stock ledger—worked comparison
Vertical: USD; see stage definitions
Horizontal: Ledger stage / settlement case
1. Fictional example
Read the graph as a data table
| Ledger stage / settlement case | Fictional example |
|---|---|
| 0 | 10,000 |
| 1 | 9,700 |
What would invalidate the reading?
Ignoring share mark-to-market while reporting only premiums turns a losing program into a misleading income story. Funding failure can cause liquidation before the planned next phase.
Check your understanding
Try the question before revealing its answer. These are reading checks, not trading certification or a site completion record.
What is the critical failure to avoid?
Reveal the worked answer
Ignoring share mark-to-market while reporting only premiums turns a losing program into a misleading income story. Funding failure can cause liquidation before the planned next phase.
Explain this risk before treating the example as a decision rule. A correct calculation does not guarantee a favorable market outcome.
Return to the question: What changes when the short put becomes shares? State the observed facts, the assumptions and the failure condition separately.
Sources, assumptions and downloadable script
External references support definitions and conventions. Worked scenarios and prose are original. No current quotes or dealer inventory are claimed.
Read this lesson as Markdown · Download its JavaScript content module