covered call profit and loss question

Discussion in 'Options' started by IronFist, Oct 10, 2011.

  1. WTF are you talking about the prior week's 22k isn't shown? It is clearly shown as the week right before..it says 22,110.

    Anyone reading this can very easily go to my journal, look at the picture, and see that the line item before the most recent week of 23,286 says 22,110. Which you are claiming isn't shown, all of your credibility just went out the window.
     
    #61     Oct 11, 2011
  2. [​IMG]
     
    #62     Oct 11, 2011
  3. They are weekly totals, and the percentages are weekly percentage changes. the -8.51 represents -8.51% from the prior week, not from previous high or whatever it is you may be thinking it refers to.
     
    #63     Oct 11, 2011
  4. Wow ........ It takes 62 posts to try and explain why the short call option position of a CC is in the red after the stock rises about 8% within days of selling the calls. And to make matters worst the OP is a regular with 1500+ posts.

    Sad day for EliteTrader when these sort of threads are popular.
     
    #64     Oct 11, 2011
  5. How does number of posts directly relate to options knowledge?

    You have more posts per day than the OP, shouldn't you be super smart? Yet you contribute nothing to this thread.
     
    #65     Oct 11, 2011
  6. I once owned SBUX and sold calls against it. They were out of the money when I sold it but the stock rallied and they became deep in the money. I then noticed that my long stock position was assigned TWO DAYS before expiration, so the answer to your question is "yes" but it depends whether or not the broker wants to assign the position.

    So although you have the obligation to sell the stock at the strike once it's in the money, and the broker can exercise assignment at anytime, usually it does not get assigned until expiration.
     
    #66     Oct 11, 2011
  7. What happens if:

    - You own a stock

    - You sell a covered call against it

    - a week or so before expiration, the call becomes ITM, but is not assigned

    - 2 days before expiration, the stock goes back down and the call is no longer ITM

    - at expiration the stock is still trading below the strike price so the call is OTM and expires worthless

    The stockholder gets to keep his shares. Does the call holder just kick himself then for not exercising it when it was ITM?
     
    #67     Oct 12, 2011
  8. spindr0

    spindr0

    The broker cannot exercise your position anytime he wants. Assignments and exercise come from the OCC and are done on a random basis. The broker decides how customers will be chosen and that process is supposed to be in the Options Agreement.
     
    #68     Oct 12, 2011
  9. spindr0

    spindr0

    See the OCC Option pamplet on page 12, paragraph three: Woulda-coulda-shoulda :)

    Trying to eke out the last nickel or save some slippage or commissions often comes back to bite you.

    If the UL rallies and you make a large percentage of the potential profit weeks or even a month before expiration, it's not a bad idea to cover and redeploy the cash (assuming you're not a buy and hold type).
     
    #69     Oct 12, 2011
  10. Yes, all they can do is kick themselves :)
     
    #70     Oct 12, 2011