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Started By
Message
Sold a covered call to expire today, will it be exercised?
Posted on 12/18/20 at 10:51 am
Posted on 12/18/20 at 10:51 am
I’m newer to options, haven’t been trading them very long.
I sold a 12/18 PD $45 call, a few weeks back.
I know my calls will automatically get exercised if they close in the money. I’ve never had one this close to the money at expiration, though. It’s currently trading at $45.03.
If it closes at $44.90 and then jumps to $45 after hours, will it automatically be exercised? Or is the closing price all that matter?
I sold a 12/18 PD $45 call, a few weeks back.
I know my calls will automatically get exercised if they close in the money. I’ve never had one this close to the money at expiration, though. It’s currently trading at $45.03.
If it closes at $44.90 and then jumps to $45 after hours, will it automatically be exercised? Or is the closing price all that matter?
1
Posted on 12/18/20 at 10:54 am to Tigerfan56
One cent over strike price at closing and it’ll execute.
If you want to keep the shares, close the call position right now. You will still profit on trade if it’s this close to strike price
If you want to keep the shares, close the call position right now. You will still profit on trade if it’s this close to strike price
Posted on 12/18/20 at 10:55 am to Toula
quote:
One cent over strike price at closing and it’ll execute.
I understand that. What if it closes under, but then crosses over the strike price after hours? Will I keep the shares in this scenario?
Posted on 12/18/20 at 10:59 am to Tigerfan56
After hours is irrelevant, it’s just market hours.
Posted on 12/18/20 at 11:00 am to Toula
Thanks 
Posted on 12/18/20 at 6:29 pm to Tigerfan56
That is not totally correct information. Since you sold a call, the owner of that call has approximately 1.5 hours after the close to decide if he wants to exercise his option. Price movement after hours COULD result in an exercise even though the price at the close was below the strike. Not a huge risk with covered calls but one could definitely get hurt with selling naked options and/or spreads. Here is some additional information:
LINK
LINK
Posted on 12/18/20 at 7:13 pm to drsung
Good on you for posting that. For newer, or even less seasoned older traders, that’s a good read. Great info there.
I don’t think many people here trade index options, but knowing how weekly vs. monthly contracts settle in things like the SPX is also VERY important. If anyone is curious, I’ll post that process sometime.
My favorite part of that article, which applies to ALL forms of trading:
For newer, or even less seasoned older traders, that’s a good read. Great info there. I don’t think many people here trade index options, but knowing how weekly vs. monthly contracts settle in things like the SPX is also VERY important. If anyone is curious, I’ll post that process sometime.
My favorite part of that article, which applies to ALL forms of trading:
quote:
All traders lose money on some of their trades over time. The bad ones lose money but don’t understand why. You should know the risks of your positions.
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