Let's say ticket ABC is at $15.00 per share and I own an option on the security. If I want to sell the option when ABC gets to $20, how do I price the option? I know Delta is the correlation. But, doesn't Delta change all the time? So, wouldn't it be a different Delta at 16, 17, 18, 19, and 20. I think I'd have to actually manually calculate the option price in Excel using the Black Scholes model.
I don't have that ability. I use Merrill Edge. I would use interactive brokers, but I work for Citi. It has to go through this whole approval process. There has to be a way.
You won't know what when it will happen or what will be IV at that time, so may not be able to price the option before it happens. How about setting up some alert to notify you when ACB gets to $20, then placing manual order to close your option position?
That's what I got going so far. It'd be nice to just plug the variables into Excel and price out a limit order. I know there are some templates for sale, and I've even tried to price them manually, but it's imperfect.
Lets say the call 15 is trading at $3.00 now (so 20% at the money time value). If you put an order in for the call 20 at $4.00 you can be sure that it will sell when stock is close to $20. (above is assuming a medium to long term maturity of the option (you didn't specify this))
I understand. The call will 100% sell using your way, if you use Delta and gamma you just get a little more out of it. Didn't mean to contradict, thanks for the help.