... more than just covered calls!
Focus - 'Simple and Repeatable'
ALLOWING ASSIGNMENT
One of the GUIDELINES to the SysCW process is as follows:
$ It's okay to take a profit.
When the Initial Position is established, one of two events will take place. Either the option will be exercised or it won't. There are no other choices*. Before the position (buy a stock and sell a call) is established, a writer uses a simple math exercise to determine ahead of time what the annualized return will be IF the option is exercised. When will that happen?
The current regulation is - anytime the price of the underlying stock price is five cents or more above the strike price on expiration Friday, the option will be exercised. Keep in mind that the owner of the option 'could' exercise their right to buy the stock at any point in time between when it was sold to them, and the expiration date. There are many cautionary words written in many different Web sites, and even in the 'Characteristics and Risks of Standardized Options'. It is from that latter source that the following quote can be found on page 62:
'The writer of a covered call forgoes the opportunity to benefit from an increase in the
value of the underlying interest above the option price ...'
The principles of SysCW suggests that this is not an issue because when the position was establish, an acceptable annualized rate of return would be generated if the call option were to be exercised. If the writer of the call does not lose sight of the purpose of the trade, then why worry about how much 'could have been made' if only the stock was purchased, and not covered in the first place. The stock market is full of could-a-would-a-should-of done this, or not done that. Just remember that hind-sight is always twenty twenty.
Let's put it this way. Is there anything wrong with making the amount of money a writer was planning on making when a position is established? If there is, then the writer should not have entered the position in the first place. It's that simple.
RULES
The only rule for the 'Allow Assignment' strategy is that the position was established with a satisfactory return if the option were to be exercised.
The 'strategy' is simply letting this pre-determined possibility take place. It's not like it's a surprise!
* There are no other events possible unless the writer of the call rolls the option. Call option will either expire or be exercised is the writer does nothing.