ITM time premium and assignment risk?

Discussion in 'Options' started by turkeyneck, Sep 13, 2010.

  1. I'm short AAPL Sep 260 CC and currently under water. There's about 0.70 time premium left. Should I worry about early assignment between now and Friday or no one will exercise with still quite a bit of time premium left?
  2. stoic


    I would have to say right now the market is over bought based on the 10 day vs. the 50 day moving average of the TRIN.

    I do not see any reason for early assignment like a div.

    For me when I do a CC and want to keep the stock for more up-side I do a roll-up and out.

    I looked at the Jan.11 270 calls going for 18.45 so one could do the roll for additional credit.
  3. nope but its a covered call so why would you care it just means you get your expected total profit now rather than later. Early assignment would be a bonus actually, FREE money in your pocket.
  4. How are you under water? The stock has been rising for 2+ weeks
  5. Not all covered call positions are profitable if assigned.
  6. curious why would someone sell a covered call that is unprofitable if assigned?
  7. spindr0


    Suppose you sell a CC and the stock drops a fair amount. The call expires. Now you can be a buy and hoper, errr holder or you can sell an OTM CC hoping to break even sooner. The lowest OTM call that gets you even could be many months out. Some might sell somethiing a bit lower and closer, hoping that the stock recovers but not past the strike sold. Unfortunately, it does. Ergo, locked in loss.

    Some people suffer from breakevenitis. :)
  8. The only problem with that of course is the stock goes down further. :)
  9. spindr0


    Such is life in the investment lane.