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Tag Archives: automatic exercise
covered cal;l writing and dividends

Why Would a Call Buyer Exercise, Rather than Sell, an In-The-Money Call Option?

When we write a covered call, there is a trader or market-maker buying that call on the other side of the trade. We know that as expiration approaches, the time value of options tends to approach zero (Theta effect). With that in mind I received an email from Marcos in early May 2017 astutely asking […]

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Blue Collar Investorf webinar series

Expiration Friday Exit Strategy Decisions For In-The-Money Strikes

Covered call writing and selling cash-secured puts obligates us to buy or sell shares at the strike price by the expiration date. Exercise will generally occur if the strike is in-the-money by 4 PM ET on expiration Friday (usually the 3rd Friday of the month). Frequently we do not want to sell our shares or […]

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exercise of options

Will My Broker Automatically Exercise Options That Expire In-The-Money?

We write a covered call or sell a cash-secured put. At expiration, the strike price is in-the-money. For calls that means lower then current market value and for puts it means higher than current market value. To demonstrate the moneyness of these strikes, let’s look at an options chain for Align technology (ALGN), a stock on […]

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