Comments on: Why Some In-The-Money Strikes Are NOT Exercised; A Real Life Example https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/ Learn how to invest by selling stock options. Mon, 07 Jan 2013 21:38:36 +0000 hourly 1 By: Alan Ellman https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/#comment-8691 Mon, 07 Jan 2013 21:38:36 +0000 http://www.thebluecollarinvestor.com/?p=7503#comment-8691 In reply to Dr. Eric Wish.

This is a partucularly meaningful compliment coming from Dr. Wish who is one of our country’s leading educators and speakers. Dr. Wish teaches a stock investing class at The University of Maryland and lectures on the topic frequently. I recommend you check out his web site:

http://wishingwealthblog.com/

Alan

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By: Alan Ellman https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/#comment-8690 Mon, 07 Jan 2013 21:33:07 +0000 http://www.thebluecollarinvestor.com/?p=7503#comment-8690 In reply to Judy.

Judy,

It IS possible but highly unlikely. Let’s say in the example I site in this article that the market reaction was extremely favorable and the after hours trading brought the price up to $8.00. In this case the $6 and $7 strikes would have a high probability of exercise even though the 4PM EST price was $5.79.

Good question.

Alan

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By: Dr. Eric Wish https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/#comment-8662 Sun, 06 Jan 2013 20:21:56 +0000 http://www.thebluecollarinvestor.com/?p=7503#comment-8662 Alan:

Thank you for your very insightful post on nonassignment of options. I learned a valuable piece of information. I wish you and your staff a Happy Holiday season and a thank you for your very very admirable efforts to educate us all about options.

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By: Alan Ellman https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/#comment-8659 Sun, 06 Jan 2013 20:08:36 +0000 http://www.thebluecollarinvestor.com/?p=7503#comment-8659 I’ve received several offsite emails from members surprised about the apparent advantage institutional investors have over us. Here is a typical Q&A:

Hello Alan. Long time reader, first time writer. I was kind of upset
when I read the article about assignment not taking place on expiration Friday. Sounds like these “traders” have a distinct advantage over the rest of us. I always thought a deal is a deal. I suppose this kind of thing is buried in the microscopic print I agreed to.

My response:

There is no doubt that the institutional players have an advantage over us BUT the playing field is leveling a bit as the SEC and FINRA have been pro-active in supporting us since the days of ENRON and then the securitization of mortgages gone bad. The situation I discussed in today’s article is rare but I felt our members needed to know about it even if it occurs so infrequently. We actually have some advantages over the “big boys” that I discuss in my materials so we must take advantage whenever possible.

My take: Things are a lot better today for Blue Collar Investors than they were years ago.

Alan

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By: Barry B https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/#comment-8658 Sun, 06 Jan 2013 20:02:16 +0000 http://www.thebluecollarinvestor.com/?p=7503#comment-8658 Premium Members,

The Weekly Report for 01-04-13 has been uploaded to the Premium Member website and is available for download.

Also, be sure to check out the latest BCI Training Videos and “Ask Alan” segments. You can view them at The Blue Collar YouTube Channel. For your convenience, the BCI YouTube Channel link is:

http://www.youtube.com/user/BlueCollarInvestor

Since Earnings Season will be starting soon, be sure to read Alan’s article, “Constructing Your Covered Call Portfolio During Earnings Season”. You can access it at:

http://www.thebluecollarinvestor.com/constructing-your-covered-call-portfolio-during-earnings-season/

Best,

Barry and The BCI Team

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By: Alan Ellman https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/#comment-8656 Sun, 06 Jan 2013 18:09:40 +0000 http://www.thebluecollarinvestor.com/?p=7503#comment-8656 In reply to Alex.

Alex,

Anyone can be a genius looking back but I would like to believe that I would have sold the stock @ $5.18 on Monday based on the information available over the weekend. If I did, my credit would be $0.95 and my share loss would be $0.12 for a net credit of $0.83 or $83 per contract less commissions. This would still have resulted in > 15% profit although admittedly I would not have used this stock for a cc trade.

Alan

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By: Judy https://www.thebluecollarinvestor.com/why-some-in-the-money-strikes-are-not-exercised-a-real-life-example/#comment-8641 Sun, 06 Jan 2013 14:18:31 +0000 http://www.thebluecollarinvestor.com/?p=7503#comment-8641 Alan,

I agree with Alex, very interesting. Is it possible for an OTM strike to be exercised after 4pm expiration Friday?

Thanks.

Judy

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