Morning Keith:
Having faced this dilema of being taken out, you can do several things, you can roll the call to the next month (or longer), but if you do it, it is usually best to roll them right by the end of options expiration friday (unless there is a hugh pullback on the stock before then). I usually do this at around 3:45 pm on friday of option's expiration. Let the broker to the roll, it takes to long to to it on your own, even with cable/DSL. It's worth the extra money. Another thing that you can do is to place an order to buy additional stock on friday of options expiration and let the take out these new shares at a higher price. For example. You own BRCM at an average cost of 150, and it's trading at 240, and you sold the april 220 calls. All you have to do is to buy stock on that friday at 240 and instruct your broker that you want THOSE SPECIFIC SHARES to be taken out, as opossed to the shares that you bought at 150. Even if you don't have the money to cover those shares, don't worry, you will be taken out on the weekend before you evne have to pay for it. What's even better, you now keep your stock that you bought at 150, and also picked up some paper losses (since you paid 240 for the shares which will be taken out at 220, thereby giving you some paper losses to offset any gains that you may already have.
Hope this helps. Other opinions will be welcome.
David |
