The "daily Call" From Option Alpha: Options Trading | Stock Options | Stock Trading | Trading Online

Hey everyone. This is Kirk here again from Option Alpha and welcome back to the daily call. Today, we’re going to answer the question – “Can you close a covered call before expiration?” This question again, comes out of our Facebook community. Somebody sent me a message and they said, “Kirk. Can you manage a covered call if the stock rallies up to your short strike before expiration?” Assuming you want to keep the stock, of course, maybe you roll your call to the next month. Again, I think the key part here is that they want to assume that they for some reason, want to keep the stock and do not want the stock to be called away, so if you have a covered call position on and the stock rallies past your short call strike, at the end of expiration if you don’t do anything, basically, what will happen is you’ll get assigned on your short call option, but since you have the underlying shares of stock in your account which creates the covered position, basically, it’s a loss. You just close out of the position at wh