Thread: Closing a Call option question

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  1. #1

    Default Closing a Call option question

    I have a basic question about Call option. Lets say:

    AAPL January 2010 Call Strike price 300.
    Bought 1 contract (100 shares) January 21st 2010 is expiry date.

    In December i see the price is not going up at all and it wont touch 300 in January. Can i Sell to Close before the strike price is reached. (Take a loss and get some money back).
  2. #2

    Default

    I have read the basics and it seems like one can not close an option or exercise prior to reaching the STRIKE price. But when i paper trade on Investopedia i can close a Call option that is far away from being in the money (way below strike price) How come i can sell it without it being at or above the strike price???

    Thanks for your input fellas.
  3. #3

    Default

    Options can be bought, sold, exercised or expire worthless. Depending on the style (american or european) will determine if they can be exercised before options expiration. Up until that time you can still get out of the option by selling (in this case) regardless of strike price compared to current price of the underlying (in this case stock).

    Free options education is available at http://www.cboe.com/LearnCenter/ and that is where I got most of my options information.
  4. #4

    Default

    Yes. you can sell the call at whatever the bid price is for that call option and turn it into cash...

    If you're in the green on it you might have to do some math to figure out if it's worth more just selling it or if it's worth more exercising it to sell the stock.
  5. #5

    Default

    And i assume the same applies for the PUTs. I can Sell to close or exercise it before the stock reaches the strike price.

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