Let's say I have 100 in the money options.. I'm thinking about all of those insane gains shorts. If I don't have enough money to purchase or exercise all of these options at once what do I do?? Can I exercise 1 option at a time, selling the 100 shares and repeating 100 times to take my profit?? Is there another way??
Closing Options (Exercise vs Selling)
byu/aserenety inoptions
Posted by aserenety
5 Comments
Do you really want the shares or do you just want the gains? If you just want the gains, then close your position and take your profit and move on. You can do this at any time, you don’t have to wait for expiration which is good because you could capture a gain and not risk it moving against you.
Based on your description I’m assuming you have long calls. Just sell your calls, that way you’ll also sell the value of the extrinsic. In other words, you’ll make more money by just selling the calls than by exercising the calls and then selling the shares.
From the new trader thread – [Options Questions Safe Haven Thread | June 03-09 2024 : r/options (reddit.com)](https://www.reddit.com/r/options/comments/1d77tkw/options_questions_safe_haven_thread_june_0309_2024/)
The top post is – **Don’t exercise your (long) options for stock!**
**Exercising throws away** [extrinsic value](https://www.reddit.com/r/options/wiki/faq/pages/extrinsic_value) **that selling retrieves.**
**Simply sell your (long) options, to close the position, to harvest value, for a gain or loss.**
Why would anyone take up capital and spend a full day to exercise when the option can simply be sold to close and collect the profit?
Be aware that your broker may auto-exercise those options if they are $0.01 ITM. You made a contract, you can trade that contract, but at the closing bell you are in a contract with someone for shares at that price.
[https://www.tradestation.com/insights/2022/12/31/rolling-options-key-things-for-traders-to-know-2/](https://www.tradestation.com/insights/2022/12/31/rolling-options-key-things-for-traders-to-know-2/)
Yet another Reddit poster , who does not trade options and has no idea of what they are. Does not understand Intrinsic value and Extrinsic value and how it is always better to close than exercise liquid options.
Here is a hint , if you exercise you LOSE THE EXTRINSIC VALUE, alright Einstein.