Covered call not getting assigned?

A

ArtOfEngineering

Curious why a covered call on PLTR I made on 25th Nov is not yet assigned even though its way ITM!

Short covered call x1 PLTR Dec 4, 26c at 2.5 currently trading at 7.

I have 100 shares of PLTR purchased at 15 and don't mind selling it at this price, as I have 2 CSP in place at various intervals.

Not sure when Interactive Brokers or the put holder will exercise the contract (or if they even will).
 
There is more than one way to close out an open call position. It can be exercised or the call buyer can just sell to close the call option. As a call option buyer, I usually, just close the call option trade by selling it. Most brokers exercise all options in the money by even $0.01.
 
smallfil said:
Most brokers exercise all options in the money by even $0.01.
More...

Got it, thanks. The broker will exercise the option as long as the option holder decides to do so.

Basically, I cannot rely on CC's to "sell" my lots. That's a new way to think about things, as this is my third trade. Getting a hang of it from covered sales.

In a way, it's not too good - neither terrible.

In these situations, I can not close the call position because of insane price jump (2.5 -> 7), but cannot even sell my underlying as it would remove the "covered"-ness.

Option 1: Just need to wait for the holder to exercise
Option 2: Wait it out till expiry and go again

Interesting conundrum.
 
In the US, Option Exercise is done by the clearing house (OCC), not by the broker.
And Call and Put have nothing to do with each other. It's not the 'Put holder' as you say that will decide if you gets exercised if you're short call.
And holding a short call position on an ITM option doesn't guarantee you that you'll get exercised.
 
Actually, keeping your shares is not a bad deal. If the call option is in the money, if you do not get exercised, you keep the premium, keep your shares which you can elect to sell since, it has gone up in price or hang on to it with the expectation of further price appreciation. You can also, sell another call option on those same shares. The last thing you want is to be exercised since, you lost your shares at a cheap price and your stock has gone up in value and you are not benefitting from such gains. Only thing you get is the option premium and proceeds from selling the call option at the strike price.
 
smallfil said:
You can also, sell another call option on those same shares.
More...

That's a good point smallfil, exactly my sentiment - to keep the shares as long, and keep selling calls (1x only for now, as I hold 100 shares).

The point is that, I can comfortably sell another call when this one expires (or I close it).

Unless, I take a small risk and sell another slightly OTM CC. Interesting.
 
The call will be auto-exercised if held ITM until expiration. You will not keep the shares on a deep ITM sale.

If there is no benefit (for example dividend) to early exercise why exercise early? You can run the calculations for early exercise yourself and see why it would or would not be done under certain conditions.
 
smallfil said:
The last thing you want is to be exercised since, you lost your shares at a cheap price and your stock has gone up in value and you are not benefitting from such gains.
More...
Actually as a covered call seller this is the preferred out come, to lose ones shares. If every CC I sold was exercised I would have a 100% win rate and be rich.

Do I ever regret the ones that got away (TSLA sold at $40 before the run to $80 and then infinity apparently) sure, but I also remember the Enron's, Boeing's, and World Comm's.
 
ArtOfEngineering said:
Curious why a covered call on PLTR I made on 25th Nov is not yet assigned even though its way ITM!

Short covered call x1 PLTR Dec 4, 26c at 2.5 currently trading at 7.

I have 100 shares of PLTR purchased at 15 and don't mind selling it at this price, as I have 2 CSP in place at various intervals.

Not sure when Interactive Brokers or the put holder will exercise the contract (or if they even will).
More...

That option (26C) currently has 1.80 premium left in it. No way that will be exercised with that much premium left.
Options won't get exercised unless there's almost zero premium left.
 
Picked this off of Google...Wait till Saturday. You will see...

You do not, however, have unlimited time to exercise those options. The reader is correct to state that options technically don't expire until noon on Saturday.

About 20 years ago, I had an option (covered call) expire at the money...To the penny. After hours the stock didn't change. Was wondering if they would exercise it. Back then commissions were about $20-30. They let it expire...
 
Last edited:
You must log in or register to reply here.
Back
Top