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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!
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To: Herm who wrote (8863)10/21/1998 8:49:00 AM
From: R Sass  Read Replies (1) of 14162
 
Herm

I have often heard that about 70% of all options expire worthless. However, I believe that the number is very close to 50%. The reason is quite simple. Assume that you have a stock trading at 30. The options that will be available are the 25's, 30's and 35's. Regardless of where the stock finishes, 3 of these 6 options will be in the money and three will be out of the money. If the stock falls to 10 the three puts have value and the calls are worthless. If the stock is at 40 the calls have value and the puts are worthless. At 30 the 35 puts have value, and the 25 calls have value. As for the 30's, they would probably be considered worthless as well.

Ralph
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