Which party determines when an option call is exercised? If I write a short call can I exercise it anytime?

Question

Lets say I write a call on a stock that is about to report earnings, betting that the stock will go up $3 per share. The stock goes up $3 a share and I want to cash in my option. Do I have to wait until the expiration date of the option call?

Answer 1

If you write a call and if the stock goes up beyond the strike price you got to pay the difference between the Price on expiry and the strike. You write a call with the hope that it will go down rather than up. There is something called 'in the money' and 'out of money' states for an option. If your 3 up is out of money then you get to pocket the premium you got for writing call. If it is in the money you got to pay the difference as I said earlier.
If you bought instead of writing then if the price went up you will pocket the difference between the market price and strike.
Here you see two things writing or selling and buying. When you write or sell a call you bet that the market is going down. When you buy a call you bet that the market is going up.
The way you ask the question on option is little confusing which shows you are starting it out. You better log on to www.optiontradingpedia.com and learn all the basic terminologies and what they do before starting any investments. Also websites www.888options.com and www.hoadely.com. You read them carefully and ask when you are in doubt.
The way you asked this question sounds like you haven't understood the basics.

Answer 2

Only the buyer (holder) of the option has the right to exercise it.

Writing an option gives you no rights. However, the writer can always close the position. If you write a covered call you can buy back the call (buy to close) and sell the stock (sell to close).

I should also note that if you want to bet the stock is going to go up $3 a share you would normally not want to sell a call option since the call option will usually lose money if the stock goes up.

Answer 3

you dont "write a short call", you write a call. When you write a call, you go short or you sell your right. The buyer, the counterpart when you write an option, will own the right/option. He is therefore has the right to exercise the option whenever he choose. Most stock option in US are american type, which allow the owner/holder of the option to exercise it before expiry date.
In your example, when you write a call, you are basically betting that the stock will not go up by $3/share. If it went up by $3, the call will be exercised.
Maybe what you mean is you buy a call (or "write a short call", although it is not a common term), which will entitle you the right to exercise if the stock went up by $3. American option will allow you to exercise it anytime before expiry date while european option is only exerciseable on expiry date/time. Most stock option in US is american style, but be sure to check your broker.
The holder, the one who buys the option and pay the premium has the right to exercise it, while the writer/seller will be obliged to deliver the stock if exercised by the holder. The writer will receive premium in return to that potential future obligation.
Therefore the term write a short call is rather confusing/contradictory.
If i were you, and i have the option that the stock will go up by $3 after the report earning, i would buy the stock now at price S and write a call, ie sell a call option, at price S+$3, and earn the premium P. If the stock indeed went up by $3, your option will be exercised by the buyer and you have to deliver your share. That is equivalent to buy your stock at S, sell it at S+$3 plus P, the ption premium you earned when you write a call. If the stock fail to go up by $3, nothing happen, you liquid your stock at lets say S+$2, and still pocke the P. Cool heh?

Answer 4

If you bet the stock is going up, you are not writing a call option. You are going long the call option or buy-to-open. The long position always decides if the option is exercised. You can exercise the long call position early if it is an American style option (all U.S. equity options are American style) but you would not want to exercise before expiration because the option would lose the value of time until expiration. In this case you should just sell the long call position (sell-to-close) to lock in your profit.