Can this even happen? Apparently my investment advisor purchased covered calls for October 2023 and the strike price has already crossed. But she is advising to wait since there is plenty of time until October. The goal of this transaction was to generate premium. (Edit: Strike price was higher than current price but it’s few $$ more than strike price.) Question: is there any chance that the covered calls will be assigned and I will be forced to give my shares away? I don’t mind the price but there is a huge tax consequence :) UPDATE: advisor was right in recommending to wait and not take any action. Stock is now $219 and strike price is $245. My paper losses last month were >$75k #personalfinance #investments
It is unlikely but possible if some buyer exercises to buy the shares now, the option will look for a matching seller. You can roll the option to higher price and later date to get the same current premium without a loss on the option.
Otm - never ATM/itm - yes. Even far from expiration. For instance, if your leg is one part of some hft's option arbitrage
Can be exercised even when it's below the strike price. That's what selling an options all about - buyer pays for control. But usually it's unlikely because they're still time value left and it would make more money selling the option. So why would they exercise?
Is there a dividend on the underlying stock?
Yes dividends continue
Well there’s one reason why the option holder might exercise early.
World Conflicts
11h
434
Is "From the River to the Sea" So Wrong?
Health & Wellness
Yesterday
995
Lasik cost
Tech Industry
8h
442
Why does everyone say that Amazon is toxic?
India
14h
576
'Hindutva': The Radical Hindu Ideology That Seeks to 'Push Christianity Out of India’
Personal Finance
7h
896
Thank you AAPL and NVDA
Yes mind got assigned before the expiration. It’s random. If your call is ITM, there’s a high chance to get assigned
What’s ATM?
Sorry I fixed the typo. either ATM(at the money) or ITM (In the money), your call strike price is at the current or below the current stock price