Can I sell the stocks acquired through call to open option in any quantity and at any time or do I have to sell through (put) options only? Also, are stocks purchased through option eligible for dividends and splits?

  • 1
    Are you talking about while the call is open, or after the call has been exercised?
    – D Stanley
    Commented Jan 19, 2021 at 18:17

2 Answers 2


Once the call has been exercised and you have bought the shares at the strike price, it's no different than if you had purchased them on the open market (just at a different price). You can sell them, are eligible for dividends, splits, etc., and can buy protective puts or sell covered calls on them.

While the call is still open (meaning you have bought a call but have not exercised it yet) you do not actually own the stock, so you cannot sell them or get dividends.

In the case of splits or special dividends, though, the options contracts are adjusted to reflect the new equivalent value. So if you own call options on a stock that splits 2:1, your option contract will be adjusted to reflect an option for twice as many shares at half the strike price (adding a cash component to account for any rounding difference). That way, call option holders aren't screwed over if a company splits and the stock price drops in half.

Also note that buying a put in not the opposite of buying a call. Buying a call and buying a put creates a "straddle" (or "strangle" if they are at different strikes), where you profit if the stock moves significantly up or down away from the strike price(s).

To cancel out a bought call option you would instead sell an equivalent call option (same strike and maturity).

  • `...and can buy covered puts or sell covered calls on them.' A covered put is a bearish strategy combining a short stock with a short put position (synthetic equivalent of selling a naked call). A better description would be that he can buy a protective put, which is what I think that you meant. You have your strangle and straddle definition backwards. While the long call is open, you can sell shares if approved for shorting, converting to a synthetic put. Last of all, a long put is the opposite of a long call, directionally but they are not equivalent and therefore do not cancel each other. Commented Jan 19, 2021 at 18:38

You can do anything you want with the stock you receive from from exercising an option - including selling it or collecting dividends. However, there are several reasons why you probably don't want to exercise before expiration. It's usually best to execute an offsetting transaction (as D Stanley pointed out, selling a equivalent call) to close your position. This avoids throwing away the time value remaining on your option, incurring additional risk, and tying up cash.

  • 1
    Rather than sell-to-close the call, it may make more sense to exercise it and sell the stock if the call is deep in-the-money call and trades below its intrinsic value. This assumes that the commission total is less than the haircut you'll take for selling your call below fair value. If this is a margin account and one has the approval and the margin to do so, short the stock first and then exercise in order to avoid slippage. Commented Jan 20, 2021 at 12:36
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    A deep-in-the-money call should never trade below it's intrinsic value. Otherwise, there is arbitrage to be made and the sharks would buy like crazy.
    – Aganju
    Commented Jan 21, 2021 at 4:45
  • Thanks for pointing that out Aganju. I definitely wasn't as as clear as I should have been in my answer. I was referring to a situation where you were a holding a deep ITM option, prior to expiration, that still had significant time value and no one wanted to pay for the extrinsic portion. Then you could exercise the option and sell the shares if you wanted to exit the position. Commented Jan 22, 2021 at 22:10

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