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You certainly should not exercise a call option when the stocks price is above the strike price. If you really want the stock, go and buy it at the market price.
For example, if you own an option with a strike price of $15 and the stock is trading at $9, why would you pay $15 to buy a stock that you could only buy or sell for $9. That would be irrational.
What else can I help you with?
How can one exercise a call option?
To exercise a call option, the option holder can buy the underlying asset at the strike price before the option's expiration date.
When should you exercise a put option?
You should exercise a put option when the stock price is below the strike price of the option, allowing you to sell the stock at a higher price than its current market value.
How can one exercise a call option with fidelity?
To exercise a call option with fidelity, the option holder must follow the terms of the contract precisely and in good faith. This typically involves notifying the broker or exchange of the decision to exercise the option before the expiration date and ensuring that the necessary funds are available to cover the purchase of the underlying asset at the agreed-upon price.
What should I do if I do not have enough money to exercise my option?
If you do not have enough money to exercise your option, you can try to negotiate with the party offering the option for an extension or alternative payment arrangement. You can also consider selling the option to someone else who is able to exercise it. It's important to communicate openly and explore all possible solutions to fulfill the option agreement.
Can you explain how to exercise a call option?
Exercising a call option means using the right to buy a specific amount of a stock at a set price before the option expires. To exercise, you simply notify your broker of your decision before the expiration date. This allows you to purchase the stock at the agreed-upon price, regardless of the current market price.
How to write a call option?
To write a call option, an investor sells the right to buy a specific stock at a set price within a certain time frame. This creates an obligation for the investor to sell the stock if the buyer chooses to exercise the option.
What is the Relationship between option price and exercise price?
For a call option, the option price is convex and decreasing with increasing strike price, assuming a fixed maturity and same underlying price.
What is it called when the price specified in an option contract at which the holder can buy or sell the underlying asset?
The price specified in an option contract at which the holder can buy or sell the underlying asset is called the "strike price" or "exercise price." This is a crucial component of the option, as it determines the conditions under which the holder can exercise the option to buy (call option) or sell (put option) the underlying asset.
What is the tax implication upon exercise of a call option?
Claim the gain or loss, relevant to the holding period of the investment.
When can you exercise an option?
You can exercise an option at any time before its expiration date.
Can anyone solve this derivative question - piesinpiexx1-x 4 for each x belongs to 01?
We have two portfolios the first you have stock and put option with a strike price X for example ( $50 ). strategy of buying a call option with strike price X for example ( $50 ) in addition you buy a treasury bills with value equal to the exercise price of the call , and with maturity date equal to the expiration date of the two option . are you can pricing the put option if you know the call option price ? Regards,HEBA Khereba We have two portfolios the first you have stock and put option with a strike price X for example ( $50 ). strategy of buying a call option with strike price X for example ( $50 ) in addition you buy a treasury bills with value equal to the exercise price of the call , and with maturity date equal to the expiration date of the two option . are you can pricing the put option if you know the call option price ? Regards,HEBA Khereba We have two portfolios the first you have stock and put option with a strike price X for example ( $50 ). strategy of buying a call option with strike price X for example ( $50 ) in addition you buy a treasury bills with value equal to the exercise price of the call , and with maturity date equal to the expiration date of the two option . are you can pricing the put option if you know the call option price ? Regards,HEBA Khereba
Is it possible for a covered call to be exercised before its expiration date?
Yes, it is possible for a covered call to be exercised before its expiration date if the option holder decides to exercise early.
