I am currently holding a debit spread that I bought pre NVDA earnings
NVDA
STO 1030 call 5/31
BTO 1040 call 5/31
Paid 6.43 for it currently at $10 + change.
Currently showing (-1550)
Since this expires tomorrow – should I sell it? Or if the stock stays above 1040 by close on 5/31 will it automatically exercise and be profitable?
Confused as to what the outcome of this will be.
Thanks for insights in advance.
Need help understanding this option
byu/InformalCookie4839 inoptions
Posted by InformalCookie4839
2 Comments
If you sold a 1030 call and bought a 1040 call with the same expiration date, you would have sold a call spread for a credit. You would not be long a debit spread. Are you sure you typed your position correctly?
Typical Reddit Post, user is clueless.
If the 1030 was SOLD and the 1040 was BOUGHT, then he collected 6.43 (or something). It can be closed for 10- 10.50 tomorrow. However as long as it stays so far ITM, he could let it expire (but first check with broker, since RH will screw you if you do that). As long as the Stock stays above 1040 then both options will automatically be exercised.
If you close you MUST CLOSE BOTH LEGS IN A SINGLE TRADE.