It's been three years since my last covered call was called away but if my memory is correct, the called away option/stock was treated as a single transaction that I had to pay commissions on. I could be wrong though but for sure I had to pay commissions. Nowadays, I just closed out my ITM options instead of delivering the stocks. Saved me capital gains big time.
Then I know about the commission, thanks. What you wrote above there was very interesting. I was thinking about that today also how it would work in practise on average. You mention it was three years ago you got your shares "called away". I also notice when I calculate that there is a big loss to not be able to get the stock gains when it happens. What is your experience, if the option is ITM on for example the last day of the option (expiration date friday) and there still is timevalue left in the option. How big chance is it that they will exersise the option during the day or will the wait to the very end of the day? (Friday expiration date) More or less how long time should we wait to buy back the call option if ITM?
One of my ITMs was only a few pennies ITM at expiration and still were called. My recommendation: 1. If the underlying is what you want to keep long term, just suck it up, close out the ITM position and move on. In that case, you can write off your losses to cover other gains. And if the underlying keeps going up, you enjoy the further upside. 2. If not and you have some profit accumulated (if you sold OTM, ATM or even ITM covered calls), being called away is a good thing except you have to pay gains. 3. How long should I wait? If a trade works against me, one of the guys here at ET once told me: Hope is not a strategy, as the situation can get worst very quickly, especially if you sell OTM calls/puts. Gamma, Delta,... all work against you (Go read Karen the Supertrader thread). I found the best strategy for me was if my OTM became ATM, I got out and not waited for it to turn DITM. 4. One trader I know on the other hand only trades AAPL options, usually selling puts/calls (occasionally he went long). He was very profitable for many years now. When a trade went against him he usually just kept rolling until he got well. I don't think there is a correct answer. Others are welcome to comment so we can learn together. Best wishes.
That's because most exchanges automatically exercise ITM options at expiration. If you still have position at expiration just do the underlying delta hedge if you don't want the position the next day....