I sold it yesterday about 30 cents higher than it closed today, I am not $10 in the money, or even close the option expires thursday the broker is IB and ive made about 500 such trades, I have never carried one short to expiraration, I will call them tomorrow.
I'm not sure what you mean by "expires Thursday". All options expire at midnight on Saturday after the third Friday. If this is a January, 2010 option, it ceases trading on 1/15 and expires on 1/16. This is not a particularly bad trade, in my opinon, certainly no worse than shorting the SPY or the ES as so many ERers have been doing. That's not to suggest there aren't better, less risky ways to short this market. My best guess is that this trade will make money if you hold it to expiration. Your gain/loss will be the premium you received, less the price of SPY on 1/16 minus the strike (102), less commissions. If you do hold it to expiration, you will be short the SPY on 1/16 with a sale price of 102. @spinn: You're using the terminology wrong, and that's what's behind some of the negativity. With SPY at 112.56, your 102 call is currently 10.56 in the money (ITM) regardless of any gain or loss on your position.
You can't hold past thursday unless you roll over to a further expiry. It's a crappy trade because it takes too much margin: the chances you will make those 10$ by thursday is 0,00000000001% or something like that
ok I will be assigned 100 shares short at expiration but since I received $1055 when i sold the option I can buy it back for $1000 leaving me with a $55 profit if SpY were to close at $112. Im not worried about margin at this point.
You probably won't be able to close it at $1000, even if SPY closes at $112 because all the time value won't truly evaporate until after the market closes, so you're going to eat the spread if you chose to close the trade. Also, while your risk reward is technically correct, it's sort of along the lines of the lottery. Calculate the expectation of this trade and you'll see it's not the home run case you might be thinking (10:1). My $0.02.
your calculation happens to work out but your comprehension of options is very Little once an option has expired u cannot buy or sell it. if held to expiration u have sold the spy at 102. your breakeven is 102 +10.50 =112.50
For your best interest, you really really should read up on a few good options book and get an understanding before you trade this instrument.
I cant disagree with that, but on the other hand nobody had the right answer...perhaps a few others should do more reading and less posting?