options
- Thread starter met1989
- Start date
You have 4 choices:
1) Exercise early -- You didn't say if you have a call or a put. Exercise call = buy underlying at the strike price. Exercise put = sell underlying at the strike price (if you don't own them, you will be short the underlying).
2) Expire -- Wait until after expiration date and they will be worthless. Your broker will likely automatically exercise at expiration if they are ITM.
3) Sell the option -- This is usually what you should do because the option will have extrinsic value left. If you exercise early, you lose the extrinsic value. As a result, you would be better off selling the option and then buying/selling the underlying instead of exercising unless for example, there's a dividend greater than the extrinsic value. You should sell the option if you don't want to buy or sell the underlying.
4) Wait -- Wait and see if the option goes further ITM if you intend to sell it and want to try to make more. Of course it could also go OTM if you wait.
1) Exercise early -- You didn't say if you have a call or a put. Exercise call = buy underlying at the strike price. Exercise put = sell underlying at the strike price (if you don't own them, you will be short the underlying).
2) Expire -- Wait until after expiration date and they will be worthless. Your broker will likely automatically exercise at expiration if they are ITM.
3) Sell the option -- This is usually what you should do because the option will have extrinsic value left. If you exercise early, you lose the extrinsic value. As a result, you would be better off selling the option and then buying/selling the underlying instead of exercising unless for example, there's a dividend greater than the extrinsic value. You should sell the option if you don't want to buy or sell the underlying.
4) Wait -- Wait and see if the option goes further ITM if you intend to sell it and want to try to make more. Of course it could also go OTM if you wait.
But according to my calculations the option nieces is worth -150$ for me if I excercise my option I’ll get 500$ so I made 350$
man you are stupid beyond belief ... try reading an book of 10 about options and then come back ... for the moment you shouldn't be trading options whatsoever
You don't sound too swift either
If the option has any time premium remaining, it tends to make more sense to sell the option rather than to exercise (salvages time premium and incurs fewer B/A spreads and commissions)
If an option is ITM and the bid is less than parity, it makes sense to exercise and close if the haircut on the option exceeds the closing costs.
Is it a call or put? If it's a call, if there is no dividends coming up on the underlying, you sell it back to the market if it's also in profit. If there is dividends coming up you can collect that's larger than your exercise cost and the premiums and more than the profit you can make if you sell the option back, then you exercise. Otherwise you wait to see if the price will rise even more, if it doesn't anymore, sell it right before its expiration date to at least recoup some losses if it's going to be more than the commission.