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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: William G. Murray who wrote (7122)3/19/1998 11:53:00 PM
From: Douglas Webb  Read Replies (1) of 14162
 
When at parity, your return is the same as it would be if you waited until option expiration and the stock was called from you except you now have this return at an earlier date.

Another way to look at this is when your option is at parity and you buy it back, all your money goes into your stock shares. When the option isn't at parity and you buy it back, the time value portion of the premium goes into the option owner's pocket rather than into your stock.

Doug.
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