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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Victoria Walley who wrote (13510)1/27/2001 12:51:47 AM
From: Sr K  Read Replies (2) of 14162
 
I used to sell OEX options on expiration day because of the excessive premiums due to fear of double- and triple-expirations, and one time sold both 690 puts and calls adding positions as the closing approached, and the close was 690.00. I recall that you can get early exercises even on index options that settle in cash.

Also, one time I exercised long calls 50 cents out of the money on expiration day, where with that broker you could give your instructions up to 4:30 Friday. Based on a breakout of technical indicators (based on the major index closes), I anticipated that a major newsletter writer would change from bearish to bullish and there would be a pop Monday morning. He did and there was, and the stock opened up 1.125. I'm sure the covered call writers were stunned to hear from their broker that their stock was called away 5/8 lower than the Monday opening.

Another experience. Often the option premiums contract early the week following expiration. Sometimes by exercising early, you can write covered calls for better premiums than if you wait until the next week.

Another. Put buyers exercise early more often than call buyers, from my experience as a put seller.

And one from January 26. I placed a bullish spread on a financial stock whose options are thinly traded, and whose stock is on the NYSE. The orders went in at 3:44 pm at the market. Unbelievably, I got a nothing done, expired.

Anything can happen. But you can make 5 or 15 times your money in a short time (2 to 4 months).
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