 What's up navigation nation welcome to today's update today's Wednesday April 22nd starting with the tradehacker question of the day Are my short calls at risk of assignment if you are an option seller You need to understand the risk of assignment around dividends a lot of stocks pay a quarterly dividend as do Some ETFs so you need to know when those happen and and then if you do have short calls that are in the money You need to understand if those short calls are at risk of assignment meaning When they pay that dividend will you get assigned short shares of stock based on which short calls? You hold so we have an entire course about Assignment and and this is one of the things that we talk about And within the course we talk about and let's go to a dividend paying stock Let's just pick J&J Johnson and Johnson as an example and go to the options chain And let's say we were in the 23 day options and J&J came out and said they were you know posting their dividend Well in this case it shows here the X dividend a day is 522, but let's just say that that was Tomorrow and so today was the last day we could do something if we had short in the money calls Now what we teach in the course is that and the dividend is posted right here So they're gonna pay an expected dividend of one dollar and one penny per share And so what you can do is you can go to your put side and say, okay If the puts are above One dollar and one cents, so that would be like the 140 strike and higher All of those are not at risk of dividend assignment, but anything Lower than 140 is because the corresponding puts are Worth less than the projected dividend payout now the question is has to do with well Why do we look at the corresponding puts to determine if we're at risk of assignment? Think about it this way think about it logically a trader will never exercise an option if there's little or no Extrinsic value, okay And so the other way you can look at this is you can pull down this chart Under option theoreticals and Greeks and look at extrinsic we talked about intrinsic and extrinsic value last week in a video and what you'll see is that the Extrinsic value matches up pretty close with the value of the corresponding puts Okay, so there's that extrinsic value So if you look at that 140 strike you see the puts are valued at about 102 to 107 and the 140 extrinsic value on the call is a little over a dollar So that's why we just say as a shortcut you can just look at the value of the corresponding puts So if you had a 140 call in the money call short call and you looked at these corresponding puts You would say you know what? I need to either roll or close that out because I am at potentially risk of assignment if I have the 140 or Anything lower so hopefully that helps the corresponding put is just a shortcut to get an idea of what that Extrinsic value is because if there is a little or no extrinsic value Then the trader is not gonna exercise because it makes no financial sense. They make more if they if they don't exercise So hopefully that helps. I know it's kind of confusing if you're a new trader. Don't worry It'll it'll start to come to you once you've been doing it a while Let's jump into the Markets and see what's happening. We've got about an hour until the markets close big day up S&Ps up 64 YM up for 80 plus NASDAQ up 238 and the Russell up 14. So everything is pretty green today Couple things I wanted to mention is couple days ago. I mentioned the oil crisis going on With the slide and oil now oil is bouncing 22% today So making a little bit of a comeback But if you've tried to trade CL or if you've tried to trade the options on CL At least with TD Ameritrade you're getting rejected They're not even allowing you to open any new positions in the oil futures at this time So you can close trades if you already had a position on but no new positions can be open now I assume that's gonna it's a it's a risk to the broker if you get caught Which means they get caught, you know kind of holding the bag So it's a broker-to-broker thing But I know at TD Ameritrade that is a situation in fact I even asked for an exception with a sizable amount of capital and cash and they said no no no no So they're a little nervous right now, too. So they're kind of restricting what you can do in oil So what else is going on here? Gold's up almost 3% bonds are down a little bit. Natty gas up almost 7% So things are moving if we look at some of the notable stocks I mean almost everything is up. You got Boeing down a little bit You got the the biotech ETF down a little bit biotech BIIB, excuse me It's just a stock Delta Airlines down a little bit But for the most part everything is green Netflix actually announced earnings and it's down 2% So I talked about you know, they're just having a monster Monster session and you can see it by that run-up. They had leading up to earnings But after earnings, they're just down a little bit So like I said, you know, no matter how good you think they're doing The question is what's priced in and what's gonna shake out after earnings? And so even though they're doing awesome their stock is still down just slightly But the thing I really wanted to point out is look at the implied volatility I mean, yes, we're getting a little bit of implied volatility contraction after earnings But in no way is it our typical implied volatility crush that we get because there is still so much Uncertainty in the market So if you're selling premium around earnings be very very careful because you're not gonna get that crush that you're used to in a typical Normal earning cycle That's all I got everyone. Have a great day. We'll talk to you tomorrow