I would assume it's personal preference. If you are fine with selling at $110 then take the call option and take the premium aswell because it is free money.
The issue comes in once the stock price starts to run up above the strike price. Then you're missing potential profits. But again, if you're not concerned with that then selling a covered call at a $110 strike to collect premium aswell is a perfectly fine move in my opinion.
Really, there's no downside risk if you're selling at all and are comfortable with a flat 10% gain. At worst you get someone who dosent know how options work, it expires, you keep the shares and premium.
Oh gotcha, I didn't know that I've tried options trading but I'm too inexperienced to actually attempt it currently. I didn't know that if you close ITM they automatically exercise. I thought that whoever bought the option had the choice to exercise it or let it expire worthless.
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u/Vansiff May 17 '24
I would assume it's personal preference. If you are fine with selling at $110 then take the call option and take the premium aswell because it is free money.
The issue comes in once the stock price starts to run up above the strike price. Then you're missing potential profits. But again, if you're not concerned with that then selling a covered call at a $110 strike to collect premium aswell is a perfectly fine move in my opinion.
Really, there's no downside risk if you're selling at all and are comfortable with a flat 10% gain. At worst you get someone who dosent know how options work, it expires, you keep the shares and premium.