What is the probabiltiy of being assigned if the call expires in the money
If you are in the money at expiration you are going to get assigned to the person on the other side of the contract. This is an extremely high probability. The only randomness comes from before expiration. Where you may be assigned because a holder exercised the option before expiration, this can unbalance some of your strategies. But in exchange, you get all the premium that was still left on the option when they exercised. An in the money option, at expiration, has no premium. The value of your in the money option is Current Stock price - Strike Price, for a call. And Strike price - Current Stock price, for a put. Thats why there is no free lunch in this scenario.
"Cart's answer describes well one aspects of puts: protective puts; which means using puts as insurance against a decline in the price of shares that you own.  That's a popular use of puts.  But I think the wording of your question is angling for another strategy: Writing puts. Consider: Cart's strategy refers to the buyer of a put.  But, on the transaction's other side is a seller of the put – and ultimately somebody created or wrote that put contract in the first place!  That first seller of the put – that is, the seller that isn't just selling one they themselves bought – is the put writer. When you write a put, you are taking on the obligation to buy the other side's stock at the put exercise price if the stock price falls below that exercise price by the expiry date.  For taking on the obligation, you receive a premium, like how an insurance company charges a premium to insure against a loss. Example:  Imagine ABC Co. stock is trading at $25.00.  You write a put contract agreeing to buy 100 shares of ABC at $20.00 per share (the exercise price) by a given expiration date.  Say you receive $2.00/share premium from the put buyer.  You now have the obligation to purchase the shares from the put buyer in the event they are below $20.00 per share when the option expires – or, technically any time before then, if the buyer chooses to exercise the option early. Assuming no early assignment, one of two things will happen at the option expiration date: ABC trades at or above $20.00 per share. In this case, the put option will expire worthless in the hands of the put buyer.  You will have pocketed the $200 and be absolved from your obligation.  This case, where ABC trades above the exercise price, is the maximum profit potential. ABC trades below $20.00 per share.  In this case, the put option will be assigned and you'll need to fork over $2000 to the put buyer in exchange for his 100 ABC shares.  If those shares are worth less than $18.00 in the market, then you've suffered a loss to the extent they are below that price (times 100), because remember – you pocketed $200 premium in the first place.  If the shares are between $18.00 to $20.00, you're still profitable, but not to the full extent of the premium received. You can see that by having written a put it's possible to acquire ABC stock at a price lower than the market price – because you received some premium in the process of writing your put.  If you don't ""succeed"" in acquiring shares on your first write (because the shares didn't get below the exercise price), you can continue to write puts and collect premium until you do get assigned. I have read the book ""Money for Nothing (And Your Stocks for FREE!)"" by Canadian author Derek Foster.  Despite the flashy title, the book essentially describes Derek's strategy for writing puts against dividend-paying value stocks he would love to own.  Derek picks quality companies that pay a dividend, and uses put writing to get in at lower-than-market prices.  Four Pillars reviewed the book and interviewed Derek Foster: Money for Nothing: Book Review and Interview with Derek Foster. Writing puts entails risk.  If the stock price drops to zero then you'll end up paying the put exercise price to acquire worthless shares!  So your down-side can easily be multiples of the premium collected.  Don't do this until and unless you understand exactly how this works.  It's advanced. Note also that your broker isn't likely to permit you to write puts without having sufficient cash or margin in your account to cover the case where you are forced to buy the stock.  You're better off having cash to secure your put buys, otherwise you may be forced into leverage (borrowing) when assigned.  Additional Resources: The Montreal Exchange options guide (PDF) that Cart already linked to is an excellent free resource for learning about options.  Refer to page 39, ""Writing secured put options"", for the strategy above. Other major options exchanges and organizations also provide high-quality free learning material:" "You owe no tax on the option transaction in 2015 in this case.  How you ultimately get taxed depends on how you dispose of the position.  If it expires, then you will have a short-term capital gain on the option position at expiration.  If it is exercised, then the option is ""gone"" for tax purposes and your basis in the underlying is adjusted.  From IRS Publication 550: If a call you write is exercised and you sell the underlying stock, increase your amount realized on the sale of the stock by the amount you received for the call when figuring your gain or loss. The gain or loss is long term or short term depending on your holding period of the stock. In your case, this will be a long-term capital gain. For completeness, if you buy to cover the option back from the market before expiration or exercise, then it is also a short-term capital gain. Also, keep in mind that this all assumes that this covered call is ""qualified"" so that it does not count as a straddle.  You can find more about that in Pub 550. https://www.irs.gov/publications/p550/ch04.html#en_US_2014_publink100010630 All of this is for US tax purposes." If you sold bought a call option then as you stated sold it to someone else what you are doing is selling the call you bought. That leaves you with no position.  This is the case if you are talking about the same strike, same expiration. "What you are describing sounds a lot like the way we handle our household budget.  This is possible, but quite difficult to do with an Excel spreadsheet.  It is much easier to do with dedicated budgeting software designed for this purpose. When choosing personal budgeting software, I've found that the available packages fall in two broad categories: Some packages take what I would call a proactive approach: You enter in your bank account balances, and assign your money into spending categories.  When you deposit your paycheck, you do the same thing: you add this money to your spending categories.  Then when you spend money, you assign it to a spending category, and the software keeps track of your category balances.  At any time, you can see both your bank balances and your spending category balances.  If you need to spend money in a category that doesn't have any more money, you'll need to move money from a different category into that one.  This approach is sometimes called the envelope system, because it resembles a digital version of putting your cash into different envelopes with different purposes.  A few examples of software in this category are You Need a Budget (YNAB), Mvelopes, and EveryDollar. Other packages take more of a reactive approach: You don't bother assigning a job to the money already in your bank account.  Instead, you just enter your monthly income and put together a spending plan.  As you spend money, you assign the transactions to a spending category, and at the end of the month, you can see what you actually spent vs. what your plan was, and try to adjust your next budget accordingly.  Software that takes this approach includes Quicken and Mint.com. I use and recommend the proactive approach, and it sounds from your question like this is the approach that you are looking for.  I've used several different budgeting software packages, and my personal recommendation is for YNAB, the software that we currently use.  I don't want this post to sound too much like a commercial, but I believe it will do everything you are looking for.   One of the great things about the proactive approach, in my opinion, is how credit card accounts are handled.  Since your spending category balances only include real money actually sitting in an account (not projected income for the month), when you spend money out of a category with your credit card, the software deducts the money from the spending category immediately, as it is already spent.  The credit card balance goes negative.  When the credit card bill comes and you pay it, this is handled in the software as an account transfer from your checking account to your credit card account.  The money in the checking account is already set aside for the purpose of paying your credit card bill. Dedicated budgeting software generally has a reconcile feature that makes verifying your bank statements very easy.  You just enter the date of your bank statement and the balance, and then the software shows you a list of the transactions that fall in those dates.  You can check each one against the transactions on the statement, editing the ones that aren't right and adding any that are missing from the software.  After everything checks out, the software marks the transactions as verified, so you can easily see what has cleared and what hasn't. Let me give you an example to clarify, in response to your comment.  This example is specific to YNAB, but other software using the same approach would work in a similar way. Let's say that you have a checking account and a credit card account.  Your checking account, named CHECKING, has $2,000 in it currently.  Your credit card currently has nothing charged on it, because you've just paid your bill and haven't used it yet this billing period.  YNAB reports the balance of your credit card account (we'll call this account CREDITCARD), as $0. Every dollar in CHECKING is assigned to a category.  For example, you've got $200 in ""groceries"", $100 in ""fast food"", $300 in ""rent"", $50 in ""phone"", $500 in ""emergency fund"", etc.  If you add up the balance of all of your categories, you'll get $2,000. Let's say that you've written a check to the grocery store for $100.  When you enter this in YNAB, you tell it the name of the store, the account that you paid with (CHECKING), and the category that the expense belongs to (groceries).  The ""groceries"" category balance will go down from $200 to $100, and the CHECKING account balance will go down from $2,000 to $1,900. Now, let's say that you've spent $10 on fast food with your credit card.  When you enter this in YNAB, you tell it the name of the restaurant, the account that you paid with (CREDITCARD), and the category that the expense belongs to (fast food).  YNAB will lower the ""fast food"" category balance from $100 to $90, and your CREDITCARD account balance will go from $0 to $-10. At this point, if you add up all the category balances, you'll get $1,890.  And if you add up your account balances, you'll also get $1,890, because CHECKING has $1,900 and CREDITCARD has $-10.  If you get your checking account bank statement at this time, the account balance of $1,900 should match the statement and you'll see the payment to the grocery store, assuming the check has cleared.  And if the credit card bill comes now, you'll see the fast food purchase and the balance of $-10. When you write a check to pay this credit card bill, you enter this in YNAB as an account transfer of $10 from CHECKING to CREDITCARD.  This transfer does not affect any of your category balances; they remain the same.  But now your CHECKING account balance is down to $1,890, and CREDITCARD is back to $0. This works just as well whether you have one checking account and one credit card, or 2 checking accounts, 2 savings accounts, and 3 credit cards.  When you want to spend some money, you look at your category balance.  If there is money in there, then the money is available to spend somewhere in one of your accounts.  Then you pick an account you want to pay with, and, looking at the account balance, if there isn't enough money in that account to pay it, you just need to move some money from another account into that one, or pick a different account.  When you pay for an expense with a credit card, the money gets deducted from the category balances immediately, and is no longer available to spend on something else." Out of the money options often have the biggest changes in value, when the stock moves upward. This person could also gain, by the implied (underlying) volatility of the stock rising if it moves erratically to either side. Still seems to be a very risky game, given only 4 days to expiry. Option contracts typically each represent 100 shares. So the 1 call contract you sold to open (wrote) grants the buyer of that option the right to purchase your 100 shares for $80.00 per share any time before the option expiration date. You were paid a gross amount of $100 (100 shares times $1.00 premium per share) for taking on the obligation to deliver should the option holder choose to exercise. You received credit in your account of $89.22, which ought to be the $100 less any trading commission (~$10?) and miscellaneous fees (regulatory, exchange, etc.) per contract. You did capture premium. However, your covered call write represents an open short position that, until either (a) the option expires worthless, or (b) is exercised, or (c) is bought back to close the position, will continue to show on your account as a liability. Until the open position is somehow closed, the value of both the short option contract and long stock will continue to fluctuate. This is normal. Options that are not worth exercising just expire. Options that are worth exercising are typically exercised automatically as they expire, resulting in a transfer of stock between the entity that issued the option and the entity that holds it. OCC options automatically exercise when they expire if the value of the option exceeds the transaction cost for the stock transfer (1/4 point to 3/4 point depending). Depending on the day and even time, you'd get your $2 profit less the $5 commission. Jack's warning is correct, but more so for thinly traded options, either due to the options having little open interest or the stock not quite so popular. In your case you have a just-in-the-money strike for a highly traded stock near expiration. That makes for about the best liquidity one can ask for.  One warning is in order - Sometime friday afternoon, there will be a negative time premium. i.e. the bid might seem lower than in the money value. At exactly $110, why would I buy the option? Only if I can buy it, exercise, and sell the stock, all for a profit, even if just pennies.