Newbie question on option.

sanju005ind

Investor, Option Writer
#1
Hi AW,Saint,Smart_Trade,Dan,


If I sell a call/put option. what are the various ways I can close out the position. Before expiry and at expiry.


Regards
Sanju
 
#2
Hi AW,Saint,Smart_Trade,Dan,


If I sell a call/put option. what are the various ways I can close out the position. Before expiry and at expiry.


Regards
Sanju
Sanju,

You can close your short position in call /put by entering into a long trade ( means buying ) in call /put anytime before expiry. On expiry the Exchange will automatically excercise all "in the money" options and put corrosponding credit to the respective buyers' accounts and debits into respective sellers' accounts. "Out of money" options expire worthless......

Smart_trade.

Smart_trade
 

DanPickUp

Well-Known Member
#3
Hi AW,Saint,Smart_Trade,Dan,


If I sell a call/put option. what are the various ways I can close out the position. Before expiry and at expiry.


Regards
Sanju
Hi

ST has explained you some ways to work with your sold call or put.

I will add a bit to expand your knowledge about option trading.

To make it simple, I will use only the short call. So you can make it vice versa with the put.

If you are short a call, you expect market moves down.

If this happen now and you see for what ever reason, that market start to go up, you buy back your short call and add/buy an other long call slightly otm to your position.

You now have looked in your profit from the short call and you have a no cost money long call for an up turn of the market.

Such strategies can be traded in swing markets and can be fine tuned.

Tc

DanPickUp
 

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