Understanding my risk

[donnap]

I buy a call at strike price of $80 (ITM) and sell a call (uncovered) at $95 I'm asking that should the buyer of my sold call at $95 exercise the option if the stock were to hit, say, $110,

I was asking about the uncovered call I sold at $80 and the buyer (not me) exercises their option to buy at $80 while the stock's current price is $95.

wtf?

 

[kreskos]

When you try to work on Forex, you need to understand that all this venture is a risk, and you can lose money.

 

[wburt1948]

Thanks. Yeah, not spending all that much while the learning curve builds.

Can you help with this question....
Buying a call spread of 40 Buy / 60 Short with stock at $42 with net cost $300.
I understand that the short sell would hopefully stay below the strike price of $60 but should the asset go to $72, is it the increasing value of the bought at a strike price of $40 that limits the Max Loss to the original $300 cost? All the articles I read note that the Max Loss is limited to the original cost and I am just not sure how that happens. Thanks.

 

[wburt1948]

Found my own answer ...
https://www.fidelity.com/learning-c...it is limited if the,long call (lower strike)

 

[taowave]

What option books are you reading

??

Found my own answer ...
https://www.fidelity.com/learning-center/investment-products/options/options-strategy-guide/bull-call-spread#:~:text=Example of bull call spread&text=Profit is limited if the,long call (lower strike)

 

[wburt1948]

Books? what are those? All online readings. Every site that yields results to my questions. Poking around to make sure I know what I'm getting into. One or two naked calls, about 5 call spreads and one put spread so far. Today was a downer, but good for the put spread. I appreacite your replies. Thanks.

 

[taowave]

I would strongly recommend you read a couple of good books on option trading..
Poking around will give you just enough knowledge to get smoked

 

[wburt1948]

ok. I appreciate your advice. I'm not investing thousands of dollars. Most of my trades are in the $80 - 300 range and I am not spending more than I can afford to lose. That having been said, I've done ok so far and as long as I'm cautious and conservative, I feel good with it. Thanks again.

 

[Nicolem]

Forex trading revolves around risks only. There can be ways through which you can minimise your risks - Always set up your TP ( take profit ) and SL ( Stop losses ). Don’t panic in an unfavourable situation, set your leverage by considering all other factors, put your trades on the basis of news for currency pairs. If you are afraid of losing money, use EA’s.

 

[bh_prop]

Nobody really answered this. The reason you would not want to exercise your itm call is because you would be forfeiting all remaining extrinsic value of the option. You would make more $$ by selling the call vs exercising it.

Well, here's my thinking. If I could exercise a call at a strike price of $80 and sell it the same day at $95 why wouldn't I? Roughly $1500 profit in a matter of a day or two. I was asking about the uncovered call I sold at $80 and the buyer (not me) exercises their option to buy at $80 while the stock's current price is $95.
I guess my question is centered around the risk of selling an uncovered call, albeit with a bought call at lower price.