I just got approved for calls and puts. My question is, when I buy and call and it gets in the money and I want to cash in. Do I need to have enough buying power to purchase all 100 shares in my account?
Consider paper trading for a few months. Options are risky and hard.
Parunreborn on
You can just sell the call for a profit, you’re not obligated to exercise the contract
Bill_Gates_haircut on
don’t start out buying options. same mistake I made. I luckily didn’t loose much money(basically beer money) but it doesn’t work. and yes you need the cash to buy the shares should you choose to exercise. if you show a profit then sell the damn thing.
allenspc on
It’s funny that you refer to “exercise” as “cash in” like some kind of gambling 🙂
Anyway, “cash in” is not a good practice. Don’t cash in when buying options.
I will say you should always close your option when it makes profit.
PoemStandard6651 on
Important to understand that the Options market and the Stock market are two different animals and do not come together until and unless the buyer chooses to exercise the option or it expires ITM. So 99% of all option trades never get converted to the underlying. Just make sure to close the trade prior to expiration, if ITM. Buyers have the right to buy the underlying but not the obligation. Ignore those who tell you not to buy. Buyers can and do make money; every day in fact. If this were not the case, there would not be an options market. Whenever you read about a big killing in options, it’s always buyers.
5 Comments
Consider paper trading for a few months. Options are risky and hard.
You can just sell the call for a profit, you’re not obligated to exercise the contract
don’t start out buying options. same mistake I made. I luckily didn’t loose much money(basically beer money) but it doesn’t work. and yes you need the cash to buy the shares should you choose to exercise. if you show a profit then sell the damn thing.
It’s funny that you refer to “exercise” as “cash in” like some kind of gambling 🙂
Anyway, “cash in” is not a good practice. Don’t cash in when buying options.
I will say you should always close your option when it makes profit.
Important to understand that the Options market and the Stock market are two different animals and do not come together until and unless the buyer chooses to exercise the option or it expires ITM. So 99% of all option trades never get converted to the underlying. Just make sure to close the trade prior to expiration, if ITM. Buyers have the right to buy the underlying but not the obligation. Ignore those who tell you not to buy. Buyers can and do make money; every day in fact. If this were not the case, there would not be an options market. Whenever you read about a big killing in options, it’s always buyers.