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SPDR Gold Shares Message Board

  • c_dilip c_dilip Sep 16, 2011 4:07 PM Flag

    A covered call question

    I sold the $176 call expiring today. What is the final closing price of GLD ? I followed until 3:59PM and at that time it was a shade less than 176. For covered call excercises, ould they include today's AH action too ? I see in AH GLD is above 176. Appreciate your responses

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    • So were your shares called? If so, sweet.

    • 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.

      • 1 Reply to votingmachine
      • 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.

    • You are assigned. In the future, don't sell a call on option expiration day at the money. Ever heard of "max pain"? The market maker loves collecting off of novice traders.
      You are now short $17,603 in gld plus the cost of the assignment and any rise after hours.
      If there is a gap up in price Monday, you may be in even deeper debt. You would have ben better off just shorting the shares and then you could have gotten out of the trade(or stayed in it) on your own terms.

    • the real question is when does it actually expire....the closing price makes no difference. It's just a matter of if they call your call or not.

      and I don't know the answer

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