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Question One
The options are not referred to with the expiration date. In other words, the option is BAC Jun 12, not BAC Jun 20th. The number after the month is the strike price, NOT the expiration day. I'm telling you this - not to correct you - but to be certain that when you discuss this with anyone else, there is no misunderstanding. At first I thought you were referring to BAC Jun 20 calls becasue of the way you wrote the option description.
1) If you sell 40 BAC Jun 12 calls @ $0.61, yes, you collect 40 * $61 (less commissions).
2) It does NOT matter where BAC stock is trading next Tuesday. Correct. The only point I want to mention is that the price of the option changes as market conditions change. That means the price of the option may be a little higher or a little lower than 61 cents. But if you already sold your 40 contracts, that will not be important to you.
3) I assume you own 4,000 shares of BAC and that that you are selling a <i>covered,/i>call, and not writing naked options.
Question Two
1) No. No one will exercise the option prior to expiration day. That would be very foolish of them. If the call owner does not want to own the options, he or she sells them. They should NEVER exercise before the options expire - with the possible exception of exercising to collect the dividend. This is a very important point. Many rookies are under the impression that call owners often exercsie options, when in reality, options are almost never exercised prior to expiration.
2) If BAC is above the strike price (12) when expiration arrives - that's the closing price on Jun 19, 2009 - then you can expect to be assigned an exercise notice and sell your shares at $12.
Yes, your maximum profit is $12 minus current price (or purchase price) x 40. Plus you also earn the option premium (40 x 61)
'I can make $2,440 for sure.' That is not true - but it depends on just exactly what you are trying to say.
Yes, you keep the $2,440. It is yours forever (except for the portion you pay in taxes).
But if the stock drops to 8, you will incur a loss. You keep the $2,440, but you don't 'make' anything when you have a loss. But, your loss will be reduced by that $2,440. If you undesrtand that, then ok, I can agree that you 'make' that cash - but most people use the word 'make' to speak of a profit.
Question Three
You do NOT have to do anything.
If the stock is less than 12, the option expires worthless and the broker will remove that position from your portfolio (on Monday, following expiration). In effect, you buy thsoe options at a price of zero, with no commissions.
If the stock is above 12 and you sell your shares, your broker will remove 4,000 shares from your account and give you $48,000 from the sale of 4,000 shares at 12.
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