A simple question about seliing a current call position

S

Saldarya

Hello all,

I have just recently began to get involved in Options, learning, and trading with virtual funds at this time. I have a pretty sound understanding of the basics with the exception of the following:

I buy a Call position and after a few days or week it has shown a trememdous profit, and I want to get out. Can I sell my position and just cash out the profit?

Or, do I have to 'sell' the call at the same strike price that I purchased it at, at current prices (in which case the premium woudl be close to my profit). Would it open a new position that I have to now contend with?

Hope that made sense. I have been using TOS which I have enjoyed thus far. So, if anyone can relate this answer as to how I would sell an open Call position on the TOS platform, I would appreciate it.

Thanks!!

Bobby
 
Quote from Saldarya:

Can I sell my position and just cash out the profit?

Or, do I have to 'sell' the call at the same strike price that I purchased it at, at current prices (in which case the premium woudl be close to my profit).
More...

I'm not sure why those sound like two different things to you.

If you buy 100 shares of GOOG and the stock goes up and you want to sell, you sell those 100 shares of GOOG. Your profit is what you sold it for minus what you bought it for, and you're now clear of the position.

If you buy a call contract and the call goes up and you want to sell, you sell that same call contract ("sell to close"). Your profit is what you sold it for minus what you bought it for, and you're now clear of the position.

The principle is the same. You buy a thing, you sell the same thing, ???, profit!

There's no reason to forget everything you know about trading, just because what you're trading has a different name.
 
Quote from Saldarya:

I have been using TOS which I have enjoyed thus far. So, if anyone can relate this answer as to how I would sell an open Call position on the TOS platform, I would appreciate it. [/B]
More...

Simply sell the call that you bought.

For example. Let's say on April 14 you bought a June 08 SPY 135 call for 4.25. On May 2 the June 08 SPY 135 Call was trading at 8.35 (that's a real scenario by the way.) You simply sell the call back to the market at 8.35 and the 4.10 is you profit (less commissions.)

On the ToS platform you can create a closing transaction one of several ways. You can do it from the monitor tab, the trade tab, the analyze tab, and the account tab.

I use the account tab. Select the Account tab, then select the Options tab which will open and show you all your open positions. Right click on your long position and select Create Closing Order. That will take you back to the trade tab with your closing order on the bottom of the screen. You can then send it at the mark price or you can choose another pioce such as the natural.

It's just that simple. I have been a ToS customer for years and the platform keeps getting better. I would encourage you to spend some time, if you haven't yet, with all the chat archives and tutorials on the ToS websites to learn more about the software.


Rick
 
Quote from rickcremer:

Simply sell the call that you bought.

For example. Let's say on April 14 you bought a June 08 SPY 135 call for 4.25. On May 2 the June 08 SPY 135 Call was trading at 8.35 (that's a real scenario by the way.) You simply sell the call back to the market at 8.35 and the 4.10 is you profit (less commissions.)

On the ToS platform you can create a closing transaction one of several ways. You can do it from the monitor tab, the trade tab, the analyze tab, and the account tab.

I use the account tab. Select the Account tab, then select the Options tab which will open and show you all your open positions. Right click on your long position and select Create Closing Order. That will take you back to the trade tab with your closing order on the bottom of the screen. You can then send it at the mark price or you can choose another pioce such as the natural.

It's just that simple. I have been a ToS customer for years and the platform keeps getting better. I would encourage you to spend some time, if you haven't yet, with all the chat archives and tutorials on the ToS websites to learn more about the software.


Rick
More...

Thank you very much Rick, a great explanation!!

Bobby
 
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