Q: Hi 5i guys. Back in OCT or Nov when Linamar was stuck in the low $70 range I sold a long dated call on LNR at $80 strike price since I didn't think LNR was going to move in price very much and I thought I would collect some premiums. Well LNR has been well over $80 for a couple of weeks and the option still has not been exercised and I still have my 100 shares of LNR. This seems odd to me since I figured that the counter party to this option would have exercised their option to take the LNR shares. Is there a logical reason why this option is still outstanding. I am not disappointed with my call selling strategy since I got over $3 of premium so I am flat since LNR has been trading around $84.
5i Research Answer:
As long as there is time to expiry, the option holder will likely hold, as holding does not require more capital, and exercising does. The holder has leverage and will still benefit if the stock rises further. Sometimes, holders will exercise to get the dividend, but the next dividend is not paid until April. Generally, most options are held to expiry.