beginner question on options exercise

[carsonsa]

In your scenario it looks like the $100 is the premium which is a sunk cost. You don't get it back if you choose to exercise the option (you just pay the strike price x 100 for each option).

In general you probably won't need to exercise the option unless there are dividends.

 

[tradethetrade]

Thanks for the explanation. I forgot to say it was a call contract. It was just a hypothetical example to understand the inner workings of this particular options trade. I was a vendor here indeed. I run a trading journal tool called trademetria.

 

[Robert Morse]

I recently communicated with this member and was very happy to see they can take our blotter as is for our customers. https://trademetria.com/integrations/lightspeed

Lightspeed Financial Services Group LLC. is not affiliated with this service providers. Data, information, and material (“content”) is provided for informational purposes only. This content neither is, nor should be construed as an offer, solicitation, or recommendation to buy or sell any securities. Any investment decisions made by the user through the use of such content is solely based on the user’s independent analysis taking into consideration your financial circumstances, investment objectives, and risk tolerance. Lightspeed Financial Services Group LLC does not endorse, offer nor recommend any of the services provided and any service used to execute any trading strategies are solely based on the independent analysis of the user.

I run a trading journal tool called trademetria.

 

[Fordredwyn]

Options trading is a very subtle thing. The mechanism on the one side recalls of forex trading, but at the same time it's completely different system which demands a bit different approach.
When you open a trade with a certain position size, then if you go long, and the deal works out, you receive the sum you initially invested + certain percentage ratio. In case of failure, you just lose the money you allocated for this position.