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I just discovered that a stock I've held onto a few hundred shares of for a while, which is currently trading for about half what I paid (under a dollar a share) has an options contract for a covered call with a $5 strike price and an expiration date of two months from now. The call contracts are priced at $2.95. I am putting all my shares up for sale as covered calls, but why would anyone pay so much for an option contract when they can buy shares of the stock outright at a fraction of the price? Is it likely that my covered call options will go unsold, or have I stumbled onto some strange (highly profitable) anomaly?

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  • Check for a reverse split with the option contract referring to an accounting of the pre-split shares.
    – S Spring
    Jan 23 at 5:53
  • You may be misreading the quote. Please provide the name stock and the option that you're looking at.
    – Bob Baerker
    Jan 23 at 17:35

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The word "contract" in securities generally refers to 100 shares. So the price of $2.95 for a "contract" probably translates to 2.95 cents/share.

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