If you want to hold the stock why not wait until the option expires or sell the option and buy the stock. If you do that you won't give up any extrinsic value the option still has.
have you exercised options? tax implications how it is done
- Thread starter ggelitetrader000
- Start date
If you want to get out of your position you would sell your option not exercise it. Exercising an option doesn't get you out of your position, it gives you long/short stock. If you exercise your option early it will cost you money vs selling it out as you will lose any extrinsic value your option.
What if the value of stock is worth more than the value of the option and expiration is close? Most times, I sell the option and not exercise it. This is one of those times when exercising the option makes more sense. Dollar values matter if you are trading. Why would you settle for less monies if you can get more?
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you all have points. in fact i just exercised and customer service warned me there is an time value that you are forgoing.
however by exercising this early, i would like to have time counter for long term hold of exercised stock starts ticking as early as possible.
however by exercising this early, i would like to have time counter for long term hold of exercised stock starts ticking as early as possible.
Well you just lost money. You could have sold your calls and bought the stock at the same time. You would have the exact same position you have now and made the extra time premium on the calls. By exercising you lost that premium.
LOL, I point out how you can make more money on a trade next time instead of locking in a guaranteed loss and I get a "piss off" Good luck with your trading in the future, you will need it.
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The easiest way to accomplish it would have been to sell the same strike put for the synthetic SSF. Eventually becomes shares unless there's pin risk.
Some accounts may not allow this.
In some cases, the ITM call may have a little extrinsic, but no market. You may not be able to get a fair fill. In that case, exercising may also make sense, but only if you want to close.
Even in that scenario, shorting shares, perhaps at a ratio, may be a superior tactic.
Once again, capital and trading permissions may limit choices.
Some accounts may not allow this.
In some cases, the ITM call may have a little extrinsic, but no market. You may not be able to get a fair fill. In that case, exercising may also make sense, but only if you want to close.
Even in that scenario, shorting shares, perhaps at a ratio, may be a superior tactic.
Once again, capital and trading permissions may limit choices.
It's not always the case with exercising that you have time premium. Especially if they are deep in the money. Like the TSLA $10 call options have a bid @ $987 even though the last is $1003.96 You'd lose almost $700 by selling those options but if you excercised them, you could sell really close to that $1003.96. Maybe 20 or 30 cents off the last instead of $7 off.