Replies to post #44763 on Anavex Life Sciences Corp (AVXL)

[joshalex5]

Yes they could exercise the option make $.50 or they can close out the position and buy back the call at a profit to

[bas2020]

As I understand, they wouldn't be able to "exercise" the option out of the money, but could try to sell it.

[Jockimo]

A call gives the holder the right to buy at the strike price. No one would ever exercise a call option that is out of the money - why would they exercise an $8 call if the stock is $7.50 - better to simply buy at $7.50 in the market than pay $8.

Something to keep in mind, the holder of the call, the purchaser, can exercise at any time up to expiration. So if the stock were at 7.50, the holder of a 5 call could exercise it at any time up to expiration. The seller of the call would get his stock called away and receive $5 a share in addition to the premium he already collected when he sold the call.

[WellSpring]

For what it's worth, I think the July calls for $10 are priced pretty good if you're bullish. I just picked up a bunch for $1.80/contract this morning. Break even is at 11.80, 13.60 doubles my money, 15.40 triples it. I like my odds over the next 7 months.

[raja48185]

why would you exercise your option to buy the stock at 8.00 when the stock can be bought in the open market for 7.50?