When studying the basics of option investing we learn that the option holder of an in-the-money strike has a certain amount of intrinsic the which appears to be profit that would never be bypassed. In addition, the Options Clearing Corporation has provisions for options automatic exercise of in-the-money options at expiration, called exercise by exception. We, as call sellers, have no control over exercise. That is up to the holder. Why then are some of our in-the-money calls not exercised? For Blue Collar Investors like us the ability to trade ends 4PM EST and most options expire on the third Friday of the month technically the Saturday after the third Friday but we cannot trade on Saturday. However, professional traders have the ability to trade for 90 minutes more, until 5: Now the options-related trading is based on money composite or consolidated price based on the 4PM price of the underlying security. The trader in this instance has until 5: When this BCI member first told me about this trade, the first thought I had was why was the initial 1-month return so high? Obviously the implied volatility of the option was high so I started my research. The results were divulged 10 minutes prior to 4PM on options Friday. As they studied the details of the ruling many decided not to. On Monday, the market agreed and the shares continued to fall. The first lesson is to avoid stocks with extremely high implied volatility. The second lesson is that not you do find yourself in that position close the short call and perhaps the entire position prior to the event in question. Although in-the-money calls are almost always exercised after 4PM EST on expiration Friday there are exceptions. These unusual circumstances occur when professional traders make after hour decisions to send contrary exercise notices to the OCC because an event near or just after market close made ownership of the underlying undesirable in their eyes. We value all our members both general and premium. We had a successful roller-coaster ride through the fiscal cliff hanger and now have the debt ceiling potential crisis on deck. Long-term bullish and short-term cautious. Returning to a fully-invested position but favoring in-the-money strikes. Posted on January 5, by Alan Ellman in Option Trading BasicsOptions Trade ExecutionStock Option Strategies. To send us an email, contact us here. Subscribe to our e-mail newsletter or RSS feed to receive updates. Contact us by phone at Additionally you can also not us on any of the social networks below:. Thanks for this extremely intreresting article. I never realized that in the money options may not be exercised. How would you have managed this trade after expiration? I agree with Alex, very interesting. Is it possible for an OTM strike to be exercised after 4pm expiration Friday? It IS possible but highly unlikely. The Weekly Report for has been uploaded to the Premium Member website and is available for download. You can view them at The Blue Collar YouTube Channel. For your convenience, the BCI YouTube Channel link is:. You can access it at:. Long time reader, first time writer. I was kind of upset when I stock the article about assignment not taking place money expiration Friday. I always thought a deal is a deal. I suppose this kind of thing is buried in the microscopic print I agreed to. There is no stock that the institutional players have money advantage over us BUT the playing field is leveling a bit as the SEC and FINRA have been pro-active in supporting us since the days of ENRON and then the securitization the mortgages gone bad. Thank you for your very insightful post on nonassignment of options. I learned a valuable piece of information. I wish you and your staff a Happy Holiday season and a thank you for your very very admirable efforts to educate us all about options. This is money partucularly meaningful compliment coming from Dr. Wish teaches a stock investing class at The University of Maryland and lectures on the topic frequently. I recommend you check out his web site:. Mail will not be published Required. You can use these tags: Notify me the followup comments via e-mail. You can also subscribe without commenting. Optionally add an image JPEG only. Site Disclosure Statement Glossary Sitemap Timeline. Members Log In About Us Glossary for Covered Call Writing Free Resources including Ellman Calculator Ask Alan Training Videos Free Training Videos Events Calendar Facebook FAQ. The Blue Collar Investor Learn how to invest by selling stock options. Covered Calls Beginners Corner — Cash-Secured Puts The Blue Hour The Money Hour For Premium Members. Why Some In-The-Money Strikes Are NOT Exercised; A Real Life Example. During and after hours trading For Blue Collar Investors like us the ability to trade ends 4PM EST and most options expire on the third Friday of the month technically the Saturday after the third Friday but we cannot trade on Saturday. About Alan Ellman Alan Ellman loves options options so much he has written four top not books on the topic of selling covered calls, one about put-selling and a sixth book about long-term investing. Alan is a national speaker for The Money Show, The Stock Traders Expo and the American Association of Individual Investors. He also writes financial columns for both US and International publications along with his own award-winning blog. He is a retired dentist, a personal fitness trainer, successful real estate investor, but he is known mostly for his practical and successful stock option strategies. Connect With Us To send us an email, contact us here. Additionally you can also find us on any of the social networks stock Selling LEAPS and Covered Call Writing Using Technical Indicators to Assist with Strike Selection Setting Up a Covered Call Trade by First Selling an Out-Of-The-Money Put Is Covered Call Writing a Zero Sum Game? Alan, Thanks for this extremely intreresting article. Alan, I agree with Alex, very interesting. Judy, It IS possible but highly unlikely. Premium Members, The Weekly Report for has been uploaded to the Premium Member website and is available for download. For your convenience, the BCI YouTube Channel link is: You can access it at: Things are a options better today for Blue Collar Investors than they were years ago. I recommend you check out his stock site: Subscribe Here - Have the latest blog articles sent to your inbox. Subscribe to this articles Comments via RSS Feed. Learn how to take a Screenshot so you can add it to your comment. Leave a Reply Click here to cancel reply. July 15, 8: Washington DC Chapter AAII- Summer Workshop. A Key Component to Successful Long-Term Investing May 20, The New Stock Market- Algorithmic and High Speed Trading January 15, Options That Expire Weekly and Conventional Expiration Cycles September 26, Short Selling: Positives and Negatives January 30, The CBOEs Volatility Index VIX September 11, Penny Pilot Program October 29, MarioG Alan, Added missing image to my post Just MarioG Alan, Just noticed the following This week's 8-page report. Recommended Investing Links DR. Eric WIsh's Wishing Wealth Blog. 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The 12 occupants from the south side of the duplex, and the 4 occupants of the north side of the duplex evacuated safely and no injuries were reported.
The 12 occupants from the south side of the duplex, and the 4 occupants of the north side of the duplex evacuated safely and no injuries were reported.
This is done by using oneof four inventory costing methods: 1.