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Tag Archives: european style option
covered call writing and dividends

Early Exercise Due to Dividend Capture: Theoretical and Practical Applications

When we write a covered call option we are obligated to sell our shares at any time from the option sale to contract expiration if the option buyer decides to take possession of our shares. This is because we are dealing with American Style options. European Style options (apply mainly to indexes, not stocks) can […]

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options on an index and on an exchange-traded fund

Index Options And Exchange-Traded Funds Options: A Comparison

Writers of covered calls and cash-secured puts use stocks or exchange-traded funds as the underlying securities. It is the value of these securities that give value to our option premiums. For example, we will buy back an option when share price moves down causing the corresponding option to decline in value as well. We may […]

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Put-Call Parity: Understanding Option Pricing

One of the mission statements of The Blue Collar Investor is to share information so that we can master option trading basics and become better investors. Many times I will research and write an article based on inquiries from our members and that is why I am able to continue to write weekly articles year […]

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Early assignment of options

Early Exercise and Assignment of Options

When we sell a covered call option, we are undertaking an obligation for which we are well paid. Should the option holder decide to exercise that option, we must sell our shares at the specified strike price at or prior to the expiration date. This is the nature of American style options as opposed to […]

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