Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Strategies & Market Trends : The Covered Calls for Dummies Thread -- Ignore unavailable to you. Want to Upgrade?

To: BDR who wrote (787)	5/25/2001 11:26:23 PM
From: dday	Read Replies (1) \| Respond to of 5205

Observations from the broker's side: Call options in the money 1/4 or more will automatically be exercised at most firms. Instructions to exercise generally will be accepted until expiration Friday 5:30 EST. Actual expiration, as was pointed out, is not until Saturday. If more than 1/4 in the money, the exercise will generally be profitable and will be done on the client's behalf unless he requests otherwise. That way, if one's call option is 10 points in the money and the broker forgets to exercise, the client does not lose. The 1/4 is an arbitrary number and certainly varies from firm to firm. The firm itself will often exercise for those small amounts since their trading costs are negligible. As far as early exercise, calls will be exercised prematurely in some cases to capture a dividend. So check your ex-dates when writing against a high dividend payer. You guys are becoming pretty proficient....may recommend we drop the 'dummy' part. Regards Bob