troymo

Dreary,

Your example places the call out of the money in which case there is no debate as we would obviously never exercise when we could just buy it at the open market for cheaper.

In the case of a non-divi paying stock, there are approximately zero situations where it is more advantageous to exercise early. Consider the following 2 scenarios:

1) Your option is in the money
A) You want to pocket the profit right away: Selling to close nets more than exercising (with a tiny possible exception of same day substitution near expiry to avoid commissions)
B) You actually want to own the stock: Exercising early vs. later gains nothing since you had the option to own the shares at the strike the entire time, only now you have more capital tied up.

2) Your option is out of the money: There is no debate now because not only does exercising have 0 value, it actually has negative value.



*note: For practical purposes this entire discussion assumes standard delivery, typical trade cost structures, no market impact, etc.