How To Write Covered Calls - An Ongoing Real Case Study! Message Board

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Strategies & Market Trends : How To Write Covered Calls - An Ongoing Real Case Study!

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To: Casaubon who wrote (10790)	5/14/1999 8:19:00 AM
From: Mark Z	Read Replies (2) of 14162

You never get assigned until the expiration date of the option. BEWARE! You can indeed be assigned prior to expiration. It is not uncommon for a holder of a call to exercise the option and sell the stock (rather than just selling the option) if the bid on the stock is greater than the current bid on the option + the strike. E.g. stock bid = 26, option strike = 25, option bid = 3/4. At 10 contracts, that's $250 the option holder would be sacrificing if (s)he just sold the option. This has happened to me twice this year just a few days before option expiration and I've done it once when I was an option holder. You're generally okay up until option expiration week but you need to keep an eye on the bids on any options you wrote that week. MMs will price options to create arbitrage situations for themselves.

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