This is what I see at IB a few instants ago. Option price is being settled by .80. So if you sell now you get a profit of .30. With so little time for expiration there is no time decay value. The price of the option will be closer and closer to (expiration strike) - (underlying price), which right now is 3.5 - 2.78 = 0.72. If you think it will continue to tank at least 0.08 down more you can wait. Otherwise sell it.
haha thanks alot for the help; really appreciate it. So high delta and low spreads are two very important factors gotcha! And what about purchasing it when its put of the money?
How does time decay value effect my overall profits? Is it that the closer i get to the expiration the more i lose on my profits? (GIVEN THAT THE STOCK IS STILL MOVING TOWARDS MY WAY )
If you purchased the JAN5 weekly (9 DTE) 3.50 Strike for 50 cents, you are now profitable by 10 to 22 cents per contract, not counting your commissions. Current DELTA is appx-.84 (ITM). Pic below:
thanks yeah im about 17 to 18 cents profitable right now. jsut wish i had bought more. see the messed up thing is that my platform doesnt show me a delta column which i now am learning from you guys that it is absolutely vital.
No, now you are about 30 cents profitable. You may issue a sell limit order by .80 and very likely it will be filled.
Without seeing anything else, the bid ask spread is too wide (26%). Make sure it's liquid, otherwise the MM will just widen it when it starts moving in your favor, and gladly take your money. And an after thought, save yourself alot of pain, learn the greeks inside and out. Good luck.