I've got an old married put, QQQQ Jan 48's plus shares. I decided it's time to close this position, so I put in an order to sell at 48 plus a few cents. So far it hasn't hit. I've always heard that it's better to sell an option than exercise if it's not expiration day, but TOS is now showing extrinsic value at -.10. I am tempted to exercise on some bastard. Any ideas?
Treat it like a zero coupon bond. If you want it to sell, you'll probably have to sell it at a discount to par.
Selling at a discount is for MORONS. Exercise. That will be the end of it. Verify the exercise fee to be certain it's not too much of a rip-off. It's usually better to sell because you can get time premium. Not in this case, so exercise. Mark
Looks like it's a flat fee of $15 to exercise. It was the same for different numbers of contracts. Of course as soon as I canceled the sell order the b/a started jumping around and TOS was showing positive extrinsic value. I'll try again tomorrow.
You can always enter the married put as a spread order, asking enough above parity to pay commissions. Remember every day you hold this position, you are no earning interest on the cash it will generate when closed. The $15 exercise fee is probably less than the commissions for selling stock and selling puts. Mark