rio up in us and london, page-28

re: rio up in us and london ... to rembrant et al Amory,
Yes I have been exercised. My broker tells me the danger times are after the underlying goes ex div ( the holder waits to collect the dividend before off loading by exercising), or when the Delta is approaching 1.

When I have been exercised the broker buys the exercised shares at the exercise price ( this would be 1,000 RIO @ $34.50 in my case) and sells them at market the same day for say $32.80 for a loss of $1,700. He charges me a min brokerage of $100 on each transaction. He could then Sell a June04 $34.50 Put for about $1.80, thus rolling the sold put forward.

So its a pain but as long as RIO eventually rises you can get out of jail.

My broker has gradually introduced me to the techniques and always keeps an eye on my margin exposure, which is covered by other share holdings.