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SPDR Gold Shares Message Board

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  • votingmachine votingmachine Sep 16, 2011 5:18 PM Flag

    A covered call question

    The option actually expires on Saturday. I've never figured out if there are brokers exercising them on Saturday, but certainly after hours would be reasonable.

    If I have an in-the-money option, Scottrade will exercise it, although there is a penny leeway. A $176.01 in the money call does not get exercised AUTOMATICALLY, but a $176.02 does. If it was up to me I would not exercise the option, but ask for it to expire worthless. 3 cents over 100 shares is a $3 profit, and the fees are more than that. The time to exercise or sell the option to someone who would was earlier in the day. I also have never let an option exercise happen automatically ... I talk to an agent. I would have bagged those $176 calls.

    Currently in AH the price is below $176 so no one would want to pay $176 ... save your money and buy in the market.

    My guess is that you will still have your shares on Monday. If you don't the price is such that you could re-enter without any pain. It looks like it was a good sale. I like to sell covered calls and always hope to pocket the sale price and not have the shares called. If you do it regularly you can get a decent yield on some stocks.

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    • The other thing to remember is you sold the option to the other party. He has the OPTION of exercising it or not. It is entirely his call. You just have to wait and see. I would think you have a decent chance of having the shares in your account on Monday, but it is up to the other party. The other party has the right to buy 100 shares for $17,600.

      But You either have 100 shares in your account or $17,600 ... sounds like a market neutral position. Hopefully you made a few bucks selling the option.

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