If i sell a covered call on a stock that is currently $12 for example and the strike is 13. The premium is 0.35. If the stock kept on going up, the premium foes up to lets say 0.45. The owner of the option decides to sell it and cash in his profits. This option now is only going to be exercised at 13.45. Right? And if the stocks keeps on going up, and the new owner of the option decides to sell it for lets say 0.65. Now these options be only profitable when the stock reaches 13.65. Is that correct?
So issuing a slightly out of the money weekly calls only risk would be if the first owner of the option bought it with the intention of exercising it, and not trading it. I assume the vast majority of options buyers or highly volatile stocks buy them only to trade them.
Submitted June 30, 2021 at 04:49AM by amrgunner1 https://ift.tt/3ybQs9t
