The NS RIG puts I sold were exercised; here are the results:
The option package was "$2314.38 cash in lieu of shares, 47 shares of RIG." I put up $8000 per contract to secure the position. The contract was exercised.
I received:
$2,314.38 cash
47 shares of RIG (current market value, at $91.85/share, is $4,316.95)
$1705 option premium($17.05 per share, 100 shares per contract)
I paid:
$8,000 cash
So, my net gain is Cash + RIG + Premium
or $2,314.38 + $4,316.95 + $1705 = $8336.33
I paid $8,000 to get $8,336.33, approximately a 4.2% return in one month. If I could do that all the time, I'd write a book.
However, I repeat that NS (Non-Standard, also called "exotic") options are not for beginners. They can be very tricky, and you can lose a lot of money very quickly.
An unexpected result of the transaction is that my average buy price for RIG is now $126.28--my broker has a buy price of $8,000/47 shares, or $170.21 per share for my new shares. It will have no affect on my trading (or for tax purposes in my particular type of account) but it makes an ugly red mark in my portfolio. Let the record show that my effective buy price is ($8,000 - 2,314.38 - 1,705)/47 shares or $84.69 per share.
