when do i see the profits?

Discussion in 'Options' started by Mdtbyk, Nov 29, 2017.

  1. spindr0

    spindr0

    When you sell an option, the amount is credited to your account. You now have a contractual obligation and at expiration, you'll find out how much of that credit you get to keep. If it's a covered call position, the credit is all yours. At that time, it's the underlying that may or may be the problem.
     
    #11     Nov 29, 2017
    johnnyrock likes this.
  2. Pekelo

    Pekelo

    Yeah, that was my solution too. I didn't want to use much extra money or margin but there is no way around that.

    Anyhow an example:

    I have AMD stocks and when price was at $11, I sold the 11 strike for 70 cents, and I would be happy to take that even if the stock goes higher. The stock actually went above 12 for a short period, and this was the point where I wanted to lock in my 70 cents premium, because I was guessing it would fall back. Sure enough, it did, and today it dipped below 11 bucks.

    I guess I could have sold just the stock and bought calls at the 13 strike price, to make it vertical calls as you suggested.
     
    #12     Nov 29, 2017
  3. spindr0

    spindr0

    In some cases, if I sell the stock and convert to a bearish call spread, I'll also sell OTM puts at the short call's strike in an equal number. The put premium brought in will partially offset the loss on the call spread if the underlying continues up. If it drops, you capture the intrinsic value of the short call and possibly get the stock back with the short puts. This approach isn't that viable with low priced stocks unless the IV is decent.
     
    #13     Nov 29, 2017
    Pekelo likes this.
  4. Mdtbyk

    Mdtbyk

    What’s IV?
     
    #14     Nov 30, 2017
  5. implied volatility
     
    #15     Nov 30, 2017
  6. spindr0

    spindr0

    #16     Nov 30, 2017
  7. Mdtbyk

    Mdtbyk

    i think only you really understood the question
     
    #17     Nov 30, 2017