There is a $2.50 call option that expires in two weeks at $50 and the current price of the option is $3. If I think the stock will hit $55 around expiration, and also think it will rise further in the future so want to keep the shares, is it just done by exercising the option and closing my position on the contract?
Noob Question for Call Options
- Thread starter DCNorion
- Start date
You can also early exercise:
https://en.wikipedia.org/wiki/Exercise_(options)#Early_exercise_strategy
If you want exercise now, and assuming you have just 1 contract (ie. 100 options) then you would need
100 * $50 = $5000 to buy the stock. Your profit would be 100 * ($53 - $50) = $300 minus $250 premium paid for the options, makes $50.
Another possibility is to just close the options position. Then your profit would also be just 100 * ($3 - $2.50) = $50
Of course this makes a 20% profit on the investment!
(edited ;-)
100 * $50 = $5000 to buy the stock. Your profit would be 100 * ($53 - $50) = $300 minus $250 premium paid for the options, makes $50.
Another possibility is to just close the options position. Then your profit would also be just 100 * ($3 - $2.50) = $50
Of course this makes a 20% profit on the investment!
(edited ;-)
Last edited:
- Buy (open or close) at the Ask
- Sell (open or close) at the Bid
You have to provide more info on the position.
99% of OTM options buyers do not intend to own the stock, they are more interested in trading the options only. If you think the underlying will rise further in the future you could consider selling your current position if it's ATM/ITM and buy some call OTM options.