I have 1800 PBR Petrobras shares.. I want some quick cash by selling covered calls a year away.. the price now is 21 and the option I sell is only a dollar more – 22 to get the higher fee. When the price hits that mark, will I lose my shares and not get the dividends before the end date?
I am asking because I did the same thing in Robinhood and even though the call option hit the price selected, I still own the shares as the end date has not been reached.
Will a PBR Petrobras call option get exercised and will I miss out the dividends?
byu/Ashamed_Emu4572 inoptions
Posted by Ashamed_Emu4572
3 Comments
if the extrinsic value is zero, yes
Options aren’t exercised when the strike price gets hit. Sometimes, although rare, they are called away before expiry, buy most of the time they aren’t called until expiry date
A call option is automatically exercised if it expires in-the-money (ITM).
It is not automatically exercised if it becomes ITM before expiration. However, it can be manually exercised before expiration.
Here is some reasons why a holder will manually exercise before expiration:
* For example, a trader might exercise a call option that is deeply ITM and close to expiration. Because the option is ITM, it will typically have negligible time value.
* Another reason for early exercise may be a pending ex-dividend date of the underlying stock. Since option holders aren’t entitled to dividends, exercising early lets them capture the dividend.
^(From:) [^(https://www.investopedia.com/terms/e/earlyexercise.asp)](https://www.investopedia.com/terms/e/earlyexercise.asp)