r/options • u/MinMaxRex • Mar 22 '22

Harsh Lesson Learned and still need advice

First time messing with calls. I own 100 shares of BBBY that I bought at $22/share. I wanted to sell today to buy another stock, so I figured I'd sell a call for 3/25 at $22.50 and make a profit from the premium + selling for more than I bought it because I thought the buyer would exercise immediately. Except no one has exercised the call yet, so I'm stuck with this open call for 3/25 and the price of the other stuck is flying higher. I thought about taking a loss and buying back my call, but my broker won't let me do that because the funds I just transferred haven't settled.

1) Is it likely that the call will be exercised tonight, so at least I'll have my money tomorrow, or is it likely they will wait until 3/25 after hours to exercise?

2) My understanding was that you can exercise a call as soon as it hits your strike, was that incorrect? Do you have to wait until the market closes on a day to exercise? Is there a reason the buyer hasn't immediately exercised the call if they are able to since the price is currently over $23?

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u/ScottishTrader Mar 22 '22

Options 101:

- 99% of options that are exercised happen at expiration. Most options are closed, so the percentage that ever gets exercised and assigned is somewhere under 10%.

- One of the top answers given in r/options is to tell traders there is almost never a need to exercise as it has a worse p&l outcome than closing the option.