OK good observation - I have been reading up in Chris Temby's...

OK good observation - I have been reading up in Chris Temby's book - Trading Stock Options and Warrants. I'm still slightly confused.
Maybe Lindfield will be able to help clarify this simply when she has a moment.


He says that:
'At expiry, the value of an option comprises only intrinsic value. For a call option this is the share price minus the strike....

Options can be bought, sold or converted to shares at any time before their expiry date.

A call or put option which expires in the money may be sold for the residual value ( the intrinsic value) of the option.

and then..
In the money Options that are allowed to run to the expiry date are either exercised or expire worthless.'

Clear as mud eh?


He also says
The exercise of an option is done by informing the broker at any time prior to expiry and is transacted at the close of business that day.
'Thus if we exercise a bought call option, the purchase of the shares is booked on that day and the scrip should be available on a T+5 basis'