In The Money Options ?

S

SaigonTed26

Hi,

Let's say I buy an option chain for XYZ Corp. with a strike price of $3.00 and it is currently trading on the market for $2.95 with a premium of $0.25, so I'd need for the price to be over $3.20 to make money. If let's say the option chain expires in a couple of days and the price is at $3.10 (in the money but not more than what I paid), could I still at the end exercise the option at a slight loss or would it need to go above the strike price and premium for me to exercise it? Thanks!
 
Quote from SaigonTed26:

Hi,

Let's say I buy an option chain for XYZ Corp. with a strike price of $3.00 and it is currently trading on the market for $2.95 with a premium of $0.25, so I'd need for the price to be over $3.20 to make money. If let's say the option chain expires in a couple of days and the price is at $3.10 (in the money but not more than what I paid), could I still at the end exercise the option at a slight loss or would it need to go above the strike price and premium for me to exercise it? Thanks!
More...

What you paid never goes into the equation as to when you exercise. At expiration, if you want the stock and it is ITM, exercise, if not sell out the option before it expires. You should never look back at cost to make decisions.
 
You exercise for 3 reasons:

1) To acquire a long or short position in the underlying
2) To close a long option trading below parity (and then cover the UL)
3) To be healthy
 
Quote from SaigonTed26:

Hi,

Let's say I buy an option chain for XYZ Corp. with a strike price of $3.00 and it is currently trading on the market for $2.95 with a premium of $0.25, so I'd need for the price to be over $3.20 to make money. If let's say the option chain expires in a couple of days and the price is at $3.10 (in the money but not more than what I paid), could I still at the end exercise the option at a slight loss or would it need to go above the strike price and premium for me to exercise it? Thanks!
More...

over 3.25 (plus commish) to make money
 
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