I'm kind of stumped about a recent trade. May I spell it out for you? I opened and credit spread for DRI (sold 105 strike for a credit of 1255; bought 125 for a 100 debit). I understood the contract buyer's break even point to be 117.55 (strike price plus premium paid). Even with their earnings beat, the underlying price fell. I normally sell out of these contracts before expiration, but as the stock price stayed well below the 117.55 i was eyeing, I decided to hold out for 100% of the premium collected.
The stock price ended well below that 117.55 but above the 105 strike. I thought I was the seller of a worthless contract, but 100 shares got called away. Now instead of realizing max profit, it appears I'm getting hit with max loss. I'm still not exactly sure how all the account activity will settle. I got another credit for 100 shares at 105. I obviously need to buy the shares back (to close the position). When I calculate this, I naturally lose on that transaction as the shares are higher than 105, but I don't exactly know how to combine everything in this transaction and follow what's happening.
I'm wanting to understand the scenario a bit better. Any help? Thanks in advance.