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Stocks A to Z / Stocks B / Berkshire Hathaway (BRK.A) ❤
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Author: blm ✧  😊 😞
Number: of 15056 
Subject: Re: out of the gate strong
Date: 01/30/2024 12:38 PM
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The owner of that option then has the ability to force you to sell them stock at $385 any day they like, up until expiry. (you have already pocketed their premium, so this is $385 more). However, in practice they will never do so so long as they can get more benefit by selling the option on the market while it still has some time value in it.

I don't understand that last sentence. Sure, whoever bought the call can sell it, but that just means the owner changed, not that the option went away. So the new owner could exercise. In fact, if an option is ITM, why would it not be exercised (other than transaction costs being more than the profit from an exercise and immediate sell, but with transaction costs being minuscule these days, it would have to be only very slightly ITM for letting it expire to make sense)?

Brian
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