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Friday, August 17, 2007

Comments

Big Doggy

Your calls will be automatically exercised. However, it is my understanding that on an options expiration you don't have to come up with the margin until the next day - meaning you can sell the stock on monday and won't get a call. That being said, I wouldn't want to own GS over the weekend unless you are in it for the long haul, better off to just sell it at the close - you'll get parity for it...

Tom

Haha...that's pretty funny. I believe they will try to exercise the option if it is in the money by over .05. Now...if you don't have the equity to purchase the stock outright... I'm not sure what happens.

Dover

Answer me this. If I held one $170 GS call that expired today, and the stock closed at $171, would I need to pony up (100 shares * $170 strike) = $17k to exercise the options? Or would they execute in a manner such that you would just receive the profit of ($1 over strike * 100 shares) = $100.

I’ve got a buddy at work with this question, and I am not sure of the answer. I have never seen an option through to expiration. I usually sell it for a loss well in advance.

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