Newbie Question regarding option pricing

N

Neyo

Hi guys,

I just have a question regarding option pricing.

i recently sold(on my demo account):
Short SPY weekly OTM put option, expiration 7th of June, at strike 160.00, premium received 0.18, and quantity 10 contracts.

by equation this should amount to : 10contracts * 100 shares per contract * premium 0.18 = 180$ profit if price is above 160.00

on the day of the expiration the Bid/Ask of the option was 0.00/0.01, yet the profit i could take if i close the option immediately was only 17$, instead of the 180$ calculated if i waited for the option to expire.

i know this is a completely newbie question but i can't seem to figure it out or find online why the pricing is this way. i don't understand why, if i close 10contracts by the difference of 0.17(0.18 - Ask0.01=0.17), i only receive 17$ instead of 170$.

if someone could explain this to me i would be very grateful because i can't seem to find an answer online.

thank you for the answers in advance!
 
If you would just let it expire, you would retain the $180 premium and not incur another commission cost.
 
Quote from DTB2:

If you would just let it expire, you would retain the $180 premium and not incur another commission cost.
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thank you for the answer, but the commission per contract trade is 0.95$(in this case, since it is 10 contracts, it would be 9.5$), wich is still a long way from 170$. :confused:
 
Quote from Jgills:

is it showing you the pnl per contract? in which case you would make 17 ten times, or 170.
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i tried closing only one contract and the profit was 1.7$, with the commission of 0.95$...so it is was meant for the whole 10 contracts, and this is why i can't figure it out.
it is a demo account, is it possible that that has something to do with it?
 
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