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Friday, March 16, 2007

SFI Options Expire Worthless

About a month ago, I sold some call options for some SFI stock I own. Those options had a strike price of $55 and expire tomorrow. Unless the stock shoots up 9 points in the remaining 3.5 hours of trading today (highly unlikely), those options will expire out of the money and I won't be required to sell my shares. I get to keep the $625 I got for selling the options (actually, around $611 after commissions) and on Monday I can turn around and do it all again!

6 comments:

Tom said...

Shaun,

Don't be so certain. I sold covered calls before and every once in while I'd have my shares
"assigned" even if they were out of money.

It's wierd but some people are willing to exercise out of money options and pay a higher price for the stock than what they could pay on the open market.

Shaun said...

Interesting. Thanks for that info. I'll keep an eye on them, but mine ended up almost $10 per share out of the money. Actually, I hope someone does exercise! I can take the money and buy back my shares and then some on Monday!

Doug O said...

Shaun, when you do that, you should wait 30 days before repurchasing the same stock... Otherwise you'll get hit with short term capital gains for the sale... If you wait the 30 days (assuming you've owned the shares for a period of time prior), then you only pay the lower, long term rate on the sale...

Shaun said...

Doug - yeah, I know. But these shares are in my Roth IRA, so I don't have to worry about tax implications. And anyway, they were not called away.

Doug O said...

ah, either you failed to mention the part about being in your IRA, or I was just not paying attention.. In that case, you're absolutely right..

Christopher Smith said...

Hmm....that's a new one for me. Why in the world would someone exercise an out of the money option?

This is like someone coming along to give you free money.

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