In The Money Options ?

Discussion in 'Options' started by SaigonTed26, Oct 26, 2011.

  1. Hi,

    Let's say I buy an option chain for XYZ Corp. with a strike price of $3.00 and it is currently trading on the market for $2.95 with a premium of $0.25, so I'd need for the price to be over $3.20 to make money. If let's say the option chain expires in a couple of days and the price is at $3.10 (in the money but not more than what I paid), could I still at the end exercise the option at a slight loss or would it need to go above the strike price and premium for me to exercise it? Thanks!
  2. ASE1245


    What you paid never goes into the equation as to when you exercise. At expiration, if you want the stock and it is ITM, exercise, if not sell out the option before it expires. You should never look back at cost to make decisions.
  3. You exercise for 3 reasons:

    1) To acquire a long or short position in the underlying
    2) To close a long option trading below parity (and then cover the UL)
    3) To be healthy
  4. over 3.25 (plus commish) to make money
  5. Thanks all for your help, that makes more sense! :)
  6. I have been trading options for a long time. The only time I exercise is at the Gym. :D