Newbie question for TASR options

crazyd · Apr 22, 2004

I am a newbie to options but I want to take a long postion in TASR options.

Is there anything I should know or be aware of? I plan on taking a large postion so I want to be careful. Its purely speculative.

Should I place my trade as a limit order? And once I have a fill, is there any chance I can get called out of the options, etc. And when I sell, should I use a limit order as well, and should I expect any problems liquidating the position at anytime thru the last day of expiration?

Thanks for your help & someone pls respond asap.

Pabst · Apr 22, 2004

Quote from crazyd:

I am a newbie to options but I want to take a long postion in TASR options.

Is there anything I should know or be aware of? I plan on taking a large postion so I want to be careful. Its purely speculative.

Should I place my trade as a limit order? And once I have a fill, is there any chance I can get called out of the options, etc. And when I sell, should I use a limit order as well, and should I expect any problems liquidating the position at anytime thru the last day of expiration?

Thanks for your help & someone pls respond asap.

As a long options holder you CANNOT be exorcised or called by someone else. Hence the term option. It's your call, no pun intended. By all means place a limit order. That doesn't mean you can't pay the offer it just means you want to limit the price you'll pay.

riskarb · Apr 22, 2004

Quote from Pabst:

As a long options holder you CANNOT be exorcised

I'm confused... what if I'm Catholic?

Pabst · Apr 22, 2004

Quote from riskarb:

I'm confused... what if I'm Catholic?

LOL! That's what happened to Linda Blair. She was short calls, got exorcised and wound up on the streets doing X-Rated flicks and pimpin' for Rick James.

crazyd · Apr 22, 2004

Thanks for your replies.

I am wondering also, is there ever any problem liquidating a call or a put? I suppose there can be if the volume is low enough so that they are not very liquid? On a stock like TASR, a closing sell should execute right away, correct? And up until the last minutes of the expiry date itself, are there any problems liquidating?

Pabst · Apr 22, 2004

Quote from crazyd:

Thanks for your replies.

I am wondering also, is there ever any problem liquidating a call or a put? I suppose there can be if the volume is low enough so that they are not very liquid? On a stock like TASR, a closing sell should execute right away, correct? And up until the last minutes of the expiry date itself, are there any problems liquidating?

TASR options are very liquid. I had some DUK options on several years ago and I WAS the open interest. Now THAT was a bitch getting out of.

nodelta · Apr 23, 2004

Quote from Pabst:

As a long options holder you CANNOT be exorcised or called by someone else. Hence the term option. It's your call, no pun intended. By all means place a limit order. That doesn't mean you can't pay the offer it just means you want to limit the price you'll pay.

I was under the impression that a long ITM option would be auto-exercised.

Am I misunderstanding?

-ND

ktm · Apr 23, 2004

Quote from nodelta:

I was under the impression that a long ITM option would be auto-exercised.

Am I misunderstanding?

-ND

It will be auto-exercised by your broker if you are more than 3/4 pt in the money at expiration. Less than 3/4 and you might get exercised. Pabst is right, but I think he's referring to the period prior to expiration.

nodelta · Apr 23, 2004

Quote from ktm:

It will be auto-exercised by your broker if you are more than 3/4 pt in the money at expiration. Less than 3/4 and you might get exercised. Pabst is right, but I think he's referring to the period prior to expiration.

Thanks.

ktm · Apr 23, 2004

Quote from crazyd:

Thanks for your replies.

I am wondering also, is there ever any problem liquidating a call or a put? I suppose there can be if the volume is low enough so that they are not very liquid? On a stock like TASR, a closing sell should execute right away, correct? And up until the last minutes of the expiry date itself, are there any problems liquidating?

There's usually not a problem, however if you decide to get out in the last hours, you may still pay some time premium. Depending on the stability of the underlying (and the amt of prem they are taking you for), you may find it more beneficial to get assigned and then dump the underlying at the next open.

There's an added risk there. With TASR, there shouldn't be an issue. I would not hold that stock over a weekend.