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kenw232

Simple Long Call Question

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Hello, I'm new to options trading. Is someone allowed to "sell to close" a Long Call before the strike price is reached?

 

For example AAPL is at about 402 a share now in middle of May. I come in and buy 1 contract of "Jul 20th - $600.00 Strike" for .35 cents for a total cost of $35.

 

Say in June AAPL moves up to about 520 a share. Can I lock that profit in by selling to close the call now? Or do I have to wait until it hits the 600 strike price or until the expiry date on July 20 to find out what happens?

 

Thanks.

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Say in June AAPL moves up to about 520 a share. Can I lock that profit in by selling to close the call now? Or do I have to wait until it hits the 600 strike price or until the expiry date on July 20 to find out what happens?

 

Thanks.

 

You can book the profit by selling the call of the same expiry (i.e. July 20) date and same strike (i.e. 600).

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Hello, I'm new to options trading. Is someone allowed to "sell to close" a Long Call before the strike price is reached?

 

For example AAPL is at about 402 a share now in middle of May. I come in and buy 1 contract of "Jul 20th - $600.00 Strike" for .35 cents for a total cost of $35.

 

Say in June AAPL moves up to about 520 a share. Can I lock that profit in by selling to close the call now? Or do I have to wait until it hits the 600 strike price or until the expiry date on July 20 to find out what happens?

 

Thanks.

 

Ken, of course you can sell your Long Call anytime. But by the way, AAPL is not at 402, your message is from yesterday , its over 450 ..

 

Hari

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What if my Long Call already had a Call Sold to offset the premium. So its was a Call Spread. If I sold a Call again to book the profit would I have to buy another Long Call to offset the original Call Sold too?

 

Hope that makes sense...

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Hello, I'm new to options trading. Is someone allowed to "sell to close" a Long Call before the strike price is reached?

 

For example AAPL is at about 402 a share now in middle of May. I come in and buy 1 contract of "Jul 20th - $600.00 Strike" for .35 cents for a total cost of $35.

 

Say in June AAPL moves up to about 520 a share. Can I lock that profit in by selling to close the call now? Or do I have to wait until it hits the 600 strike price or until the expiry date on July 20 to find out what happens?

 

Thanks.

 

yes - you can buy and sell most options like this any time you want.

 

(You cannot exercise certain options at any time - this may be where you are confused - this is the difference between American and European options)

 

Also dont be sucked into thinking you have to exercise the option in order to sell it as well. The option is simply an instrument that has an expiry date by which time it is either worth something (in which case you roll it to another option series, or exercise it or be assigned) or worth zero

 

You are clearly new at this and i would suggest you keep asking these type of questions (which is a good thing) and read a lot more - options are not necessarily that simple to grasp.

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What if my Long Call already had a Call Sold to offset the premium. So its was a Call Spread. If I sold a Call again to book the profit would I have to buy another Long Call to offset the original Call Sold too?

 

Hope that makes sense...

 

Ken, I thought you were new to Options. You're unnecessarily taking complicated positions if you really are new. If you sold a call, you'd be a "naked seller", with exposure to unlimited losses. With Options, you need to keep it simple man..especially when you're learning. Whenever you have more short in your account than Long, you are naked short, and if you're a beginner you should never be naked short (Calls or Puts).

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Ken, I thought you were new to Options. You're unnecessarily taking complicated positions if you really are new. If you sold a call, you'd be a "naked seller", with exposure to unlimited losses. With Options, you need to keep it simple man..especially when you're learning. Whenever you have more short in your account than Long, you are naked short, and if you're a beginner you should never be naked short (Calls or Puts).

 

Hello Option Tiger, I agree with you but shorting (selling) a deep out of the money is call / put make sense when we are trading in an options.

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Hello Option Tiger, I agree with you but shorting (selling) a deep out of the money is call / put make sense when we are trading in an options.

 

Larry, I do naked shorts all the time. I just would not advise a newbie to do it (which is what this thread was about)

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Larry, I do naked shorts all the time. I just would not advise a newbie to do it (which is what this thread was about)

 

I believe it depends upon the risk appetite of the trader whether he / she wants to short options or not.

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