When Your Covered Call Goes ITM: Roll, Close, Or Let It Be Assigned?
If you've been selling covered calls for a while, you've likely faced that exciting, yet sometimes stressful, moment when your short call suddenly goes in the money (ITM). Your stock has risen above the strike price, your unrealized gains look impressive, but now you're asking yourself: Should you roll the covered call, buy it back, or just let your shares be assigned? The answer isn't always clear. Each option has its own benefits, costs, and tax consequences, depending on your investment goals. The good news is that an I n-The-Money Covered Call isn't necessarily a problem. Often, it simply shows that your trade went exactly as planned. According to the Options Industry Council , covered calls are designed to generate income while accepting a limited profit potential. Once the stock climbs above your strike price, assignment becomes more likely, which is often seen as a successful outcome instead of a failed trade. What Is a Covered Call ITM? A Covered ...