Ones profit in the call options at expiry is the closing price minus strike price plus the premum one paid per share.
So in this case any strike price around 500 and above is all smoke.. And even some 480 or so.... Since once u add the premium paid for it .. There is no value in excersising the options and selling the for a net gain...
If I open a call position, the MM has to short the equal amount of shares to offset my opened call. At expiration if my calls expire worthless, the MM repurchases to close their offset. They can do this in two ways: they can simply buy back or they can open an opposite options contract and excercise it against their shares which can oftentimes make them a little more money. This effect causes the "pinning" that you often see on options expiration days. I exited my put positions on Jan 10 because I knew that this stock will get pinned to some strike price simply due to the extreme volume of open interest options. I didn't know what strike it will get pinned to but options players hates a stock that suddenly goes flat because the volatility is what we want. Options lose their value rapidly when volatility disappears.
While a writer of a call can cover it by either shorting the stock or holding the stock most big writers do neither. They are "naked" in the position. However if the option expires out of the money they premium is all theirs !
I had the exact same thing today on SWHC...they were flashing the 9.00 closing price, and I had to roll out of my Calls over there, so my shares would not get called away...forced me to Buy to Close and roll-out to a later Opex. Worked better for me anyways. If it is 1 cent over, the shares are theirs.
Simple, the strike price is to the penny. So a 500 option allows you to buy or put at $500.00 if the price is even 1 cent higher or lower (depending on put or call) the option is in the money. So if you had a $495 call it was worth at close exactly $5.00 if you had a $500 call it was worth exactly nothing