I got caught up with work and let some $25 calls expire. They converted to 100 shares. I may have lost money doing that, but I'm actually excited to have 100 shares of PLTR @$25. I'm in the same position again with $30 shares. I would love to have 100 shares @$30. I think it could be a once in a life time opportunity and willing to bet on the founder, Alex Carp.
All the info I can find says to always close the position, but I think this is a different scenario
Does it ever make sense to let options expire ITM if you want the shares?
byu/MaroonHawk27 inoptions
Posted by MaroonHawk27
6 Comments
You lost out on some extrinsic value but avoided taxes. If you think it’s a good deal then you got a good deal!!
Why not sell the option and just buy the shares, it’s liquid – you’ll get more shares
Is this just a plug for PLTR?
As Hobo134 says, you should sell your options and just buy shares, unless the options are too illiquid to get out of cheaply (not true here.) If you’re holding the $25 call while stock is trading $35, you have at least $10 of intrinsic value, plus some time value in those calls. In other words, if you sell the call, you should recoup more than $10 and so buying shares at $35 after doing that is equivalent to a cost basis of less than $25.
Sell the call which should collect more net and then use it to buy shares will likely work out better.
Letting options expire ITM when you want the shares can be tempting but it’s generally not the most cost-effective approach. You’re essentially forfeiting the option’s time value. If you’re bullish on PLTR, consider selling the $30 calls and buying the shares outright. This way, you capture the premium and reduce your cost basis. You can learn more about options strategies on Investopedia.