I had a query on options. For example I buy a Tata motors call option for strike price 220 for expiry of 23 Feb 2012. Now since the strike price is high, assume that the price just reaches 218 or so never reaching the strike price. But on 15 Feb it breaks out and reaches 235.
So now the option is in the money. Now since I have only 8 days to expiry, how do i square off or sell this option. Since close to expiry few people will buy it. Also if I wait till expiry there are high chances the stock may again go below 220 thus making the option out of the money.
This is a hypothetical case but I just want to understand the exit strategy in any case. Thanks for the help.
So now the option is in the money. Now since I have only 8 days to expiry, how do i square off or sell this option. Since close to expiry few people will buy it. Also if I wait till expiry there are high chances the stock may again go below 220 thus making the option out of the money.
This is a hypothetical case but I just want to understand the exit strategy in any case. Thanks for the help.