Compaq Message Board - Msg: 3832765

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Technology Stocks : Compaq

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To: Andreas who wrote (23354)	3/25/1998 12:06:00 PM
From: Tom K	Read Replies (1) of 97611

Here's my understanding... Since these are American options, they can be called at any time prior to expiration date. However, the good news, is that as long as there is time premium, the holder of the option will probably not call as they will lose money. They are better off to sell the call and get the time premium. If the option price + stock price is greater then the strike, you are probably OK. But watch it as they get closer to parity (equal). At expiration, your broker may automatically exercise if within 3/8's of parity. Maybe someone else can confirm this for you. Tom

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