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Ask Alan – Early Exercise of Covered Call Options

Alan answers a question from Scott of Los Angeles, CA. Scott asks, “At the beginning of a contract period you sell a $40 out-of-the-money call after purchasing the stock for $38. The stock goes up quickly within a few days with 25 days left in the period. Say the stock is now trading at $41,50, how do you know if you will get assigned or not early in the period, and how far up does a stock have to go up early in the period before it will likely be assigned?”

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About Alan Ellman

Alan Ellman loves options trading so much he has written four top selling books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog.. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies.

2 Responses to “Ask Alan – Early Exercise of Covered Call Options”

  1. Alan Ellman September 13, 2012 5:01 am

    Premium members:

    This week’s 6-page report of top-performing ETFs and analysis of ALL Select Sector Components has been uploaded to your premium site.

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    Alan and the BCI team

    ***Barry and I along with a few team members are leaving for Las Vegas early tomorrow morning. We’ll catch up on emails and comments we can’t get to this weekend, next week.

  2. Alan Ellman September 14, 2012 8:01 am

    Running list stocks in the news: LULU:

    On 9-7, LULU (maker of athletic apparel) reported a 2nd quarter earnings surprise of 16.1%. Earnings rose 30.8 year-to-year while revenues increased by 33% and operating income increased by 18%. ALL 14 analysts raised guidance. LULU has a trailing return on equity (ROE) of 35.1% compared to its industry peers’ 13.6% and boasts a long-term earnings growth rate of 29%.

    Alan and the BCI team