Based on the type of trader that I am, I would prefer to buy a call and sell that same call option that I bought for a profit as opposed to exercising the option. Is there always adequate liquidity to buy and sell an option without having to exercise the option?
lol, he was pulling your leg on large caps and popular ETFs there is always enough liquidity in the front months only the most liquid stocks and etfs have very liquid back month options
If the long call is ITM, it may trade below parity and the only way to avoid losing that negative intrinsic value is to simultaneously sell the UL and exercise the option.
The OP "wavel" put the following on another thread in March 2010 (see below). So, here we have a guy who 18 months later asks a total dufus uninformed options Q - yet he is pretentious enough or so misguided back in March 2010 as to think he can post anything meaningful about how to trade the markets. Looks like he learned a lot since then. Hard to get better trading the markets if all you do is ask questions and do no work studying and improving your skills, discipline, strategies etc. wavel, what happened to your tutorial on trading the equity markets? You think the options market is any easier??!!! lol to-wit: wavel Registered: Mar 2008 Posts: 195 03-01-10 05:58 PM Posts: 195 "03-01-10 05:58 PM Hello everybody, Over the next few weeks/months I will be presenting a complete tutorial pertaining to what in my opinion is required to trade the stock market and in fact any other financial derivative, successfully. (with a profit) The following topics will be covered in no specific order to the fullest of my personal awareness. 1) Price action 2) Pattern analysis 3) Price and Time 4) Astrological Harmonics (Yes that involves astrology) 5) Money Management It is very likely that this thread will either be closed or deleted. When that event occurs, you will understand that elitetrader has chosen to prevent the routing of any further education from myself to yourself, and therefore you can conclude that I understand how to trade the markets and that there is infact a solution which is known and available to all. I'm also open to answering any other questions, at my discretion, (some questions are virtually impossible to answer) so if you wish to ask a question, I will try to answer, wavel. Yes, pictures will be included.Oh, and to anybody who doesn't like the idea underpinning this thread...."
One day I felt like revealing my previous methods, the next day thought, no why should I do that for free and then I chose not to. Is that ok with you iceman? I havn't gave trading options a moments thought before the last month or so (after 7 years of trading) however I'm now looking at new methods with which I can expose myself to the markets. My focus in the past has been to do what I'm best at doing and now I'm ready to expand. As an experienced swing trader, believe it or not, I've only recently began to look into trading options and I understand very little about the variables involved pertaining to an options trade. However based upon what I have read thus far it would appear to appeal to my trading style. Best of luck.
So you have traded equities, successfully, for 7 years and you are asking questions about the liquidity of options markets? RIGHHHTTTTTT