-1
votes
1answer
41 views

Selling the underlying in case a covered call is exercised?

If I sell an out-of-the-money covered call and the option becomes in-the-money prior to expiry, then am I forced to sell my underlying at the strike price (assuming the counterparty decides to ...
3
votes
2answers
180 views

How can the writer of an option cancel or reverse the position & obligation before exercise or expiration?

How can the writer of, say, a call option cancel or reverse the position and its obligation (to deliver shares) before the option is exercised or the expiration date reached? Can an option that has ...
1
vote
2answers
139 views

Why are so few options ever actually exercised?

What is the reason that only a minor percentage of options get exercised (17%, I read on the OIC website)? If on expiration, the option is in the money, it will be either automatically exercised, or ...
5
votes
3answers
188 views

How does the process of “assignment” work for in-the-money Options?

Consider the following scenario - I have a covered call for XYZ for this month's expiration as XYZ May 18 25 Call. On May 18, XYZ is trading for $28, with the option listed above at $3.3. If I ...
2
votes
2answers
4k views

Difference between European and American options

Appreciate some help with a problem i am facing OK, so first I found a put and call option with same strike price and maturity for both American-style and European-style options. I selected the ones ...
1
vote
1answer
312 views

What are my risks of early assignment?

I have started writing covered puts and calls recently. Everything I read talks about the risk of early assignment of your position, but I don't really understand how often this happens. It seems that ...
0
votes
4answers
172 views

Covered call when stock position is at a loss

when writing covered calls and the stock value decreases. Sure your calls decrease to $0 and expire worthless (the desired scenario) but your stock position can continue taking a greater loss. so ...
3
votes
1answer
83 views

How do straddles that involve selling options protect against early assignment?

When doing a covered straddle in options trading, it involves selling put and call options when entering the straddle. But there is no way of guaranteeing that your options won't be assigned before ...
4
votes
2answers
207 views

Do investors go long option contracts when they cannot cover the exercise of the options?

Consider I want to buy some american-style call options for a particular stock, and suppose this underlying stock 'XYZ' is valued at $100 a share. Suppose I go long (buy) 10 option contracts for XYZ ...
4
votes
3answers
354 views

Covered calls: How to handle this trade?

I bought XNPT (Xenoport) a couple of weeks ago at 6.93 I turned right around and sold the Apr 16 call. $8.00 strike and collected 1.50 in premium. Today I get a great surprise that XNPT has rocketed ...
8
votes
2answers
2k views

What are the odds of being assigned for a long dated in-the-money call option?

If I sell a 2-year future dated call option that is slightly in the money (For example if Citi today is $5.13, I sell a call option for strike price $5.00 at Jan 2013 - today is Jan 2011), what are ...