I've a question on writing Covered Calls. Ive recently been getting into this, however as the thread title suggests with my broker Im not getting exercised at all however get Cash Settled.
So in other words rather than stocks changing hands the cash amount is all thats transferred. So this in effect means I never have my stocks sold when a call is exercised nor do I end up buying stocks if my puts are exercised.
I write monthly calls, so my question is if I use the same stocks month after month to write covered calls; im basically selling my capital gain via the Call, so how do I tell what my break even point is on the stocks say after 6 - 12 months.
Or is it the case that as long as the stocks never go under my share purchase price, I will always atleast break even?
The cash settled component has me confused.
If anyone could shed some light or even direct us to a link that vivdly explains this. That would be greatly appreciated.