Schweser Page 171: “If exercised, an American call will pay Ssub t - X, which is less than its minimum value of S sub t - (X/(1 + rfr))^T-t Thus, there is no reason for early exercise of an American call option on stocks with no dividends.” I understand the algebraic reasoning behind why this is the case. But from a practical application perspective, what about the following scenario? If I already own the call on MSFT stock and the call is currently in the money, but I think that some event in 90 days’ time is going to result in the stock declining, or some longer-term business dynamic will result in a decline, why wouldn’t I exercise my option now to buy the stock, purchase it at my relatively attractive exercise price, and get out before I think the decline will happen?
What you’re describing violates geometric brownian motion for the underlier price, so you can’t use Black-Scholes to value the option. (Everyone else without the information will use B-S, and be wrong, so you can earn an abnormal return. Go directly to Go and collect your $200!)