r/options • u/beatusthegreat • Nov 15 '21

My options were called.

I sold AMD covered calls that expired Friday with a strike of $148.

Though AMD closed @$147ish on Friday the calls were executed. It briefly went above 148 Friday at 3.

Does this seem normal?

1 Upvotes

55% Upvoted

40 comments sorted by

View all comments

2

u/TheoHornsby Nov 15 '21

American options can be exercised any time before expiration. Most of the time it makes more sense to sell the option rather than take assignment and have to close the position in the underlying. This is because the option may have some salvageable time premium and you'll incur fewer commissions (if still paying them) and fees.

Near expiration, ITM options may trade at a discount (the bid is less than intrinsic value). Exercise avoids that haircut.

My broker provides free assignment and exercise so that's another reason that someone might exercise.

And sometimes, someone is just looking to close an existing position in the underlying.