Back To www.Optiontradingpedia.com Answers

"Will My Call Options Remain Till Expiration?"


Question By Nayan Jyoti Bhattacharyya

"Will My Call Options Remain Till Expiration?"

I have a question about option market. Suppose today dated at 02/04/2011, I buy an OTM call option of "RCOM" which is now trading at suppose 300.00 Rs. I take the strike price at 320.00 @ the premium of Rs. 5.00. The expiry date of the option is suppose 26/04/2011. Now after buying the call option the price of "RCOM" was fall to 280.00Rs. After that it again rise to 335.00 Rs. and it all happen during the expiration date. Now my question is when the price fell to 280.00 Rs. at this time, will my option contract remain to the expiration date or my option will be canceled.

Asked on 23 July 2011

explosive option trading mentor Want To Pick Stocks For Options Trading Like A Pro?
Find Out How My Students Make Money Consistently Through Options Trading In The US Market Even During An Economic Downturn!


Answered by Mr. OppiE

Hi Nayan Jyoti Bhattacharyya,

So you went for a Long Call options strategy on RCOM at strike price of 320 quoted at 5.00 when RCOM was trading at 300. During the course of the trade, RCOM went up and down and finally went down to 280 with some time left to expiration and you are wondering if these call options would remain in your account until expiration day, right?

Now, any options you bought or written will remain in your account all the way to expiration no matter what price the underlying stock is unless they are being assigned early. By early assignment, it means that if you have shorted some options and someone holding those options have exercised them and you have to fulfill your obligations under the terms of the options contract. However, this situation does not exist when you are buying options and not writing them.

This means that if you have bought options and have not exercised them, you will be able to hold them all the way to expiration no matter how much out of the money or in the money it is.

As such, you should be able to hold your RCOM call options all the way to expiration even though it is very much out of the money. In fact, since it is already so much out of the money, it should be worth very little in extrinsic value and unless salvaging that bit of value is important to you, you should hold on and see if RCOM comes back in your favor before expiration.




In conclusion, you are able to hold your call options to expiration without any problem as long as you did not choose to exercise them. In this case, since they are so much out of the money, there is no point in exercising them at all.

High Yield Covered Calls High Yield Covered Calls Make Explosive Profits From Covered Calls!
Perfect for all Options Traders! Original eBook by www.Optiontradingpedia.com!
This eBook Covers:
:: The Secret to looking for the PERFECT stock for Covered Calls
:: The number of ways to write Covered Calls
:: The two ways of measuring Covered Call returns
:: Most Importantly, how to automatically look for high yield Covered Call opportunities to make up to 25% a month!
This $29.90 eBook teaches you all these and more!

Average Reader Rating : 4.5 / 5
www.Optiontradingpedia.com is a Masters 'O' Equity company and uses Masters 'O' Equity payment gateway

Response by Nayan Jyoti Bhattacharyya...

Reply by Mr. OppiE...



Continue your journey of discovery...
Click Me For Content Index
Click Above For Content Index

Have a Suggestion?
Options Expiration
Call Options
Stock Options
Options Trading

Back To Answers Main | Go To Option Trader's HQ

 

Important Disclaimer: Options involve risk and are not suitable for all investors. Data and information is provided for informational purposes only, and is not intended for trading purposes. Neither www.optiontradingpedia.com, mastersoequity.com nor any of its data or content providers shall be liable for any errors, omissions, or delays in the content, or for any actions taken in reliance thereon. Data is deemed accurate but is not warranted or guaranteed. optiontradinpedia.com and mastersoequity.com are not a registered broker-dealer and does not endorse or recommend the services of any brokerage company. The brokerage company you select is solely responsible for its services to you. By accessing, viewing, or using this site in any way, you agree to be bound by the above conditions and disclaimers found on this site.

Copyright Warning: All contents and information presented here in www.optiontradingpedia.com are property of www.Optiontradingpedia.com and are not to be copied, redistributed or downloaded in any ways unless in accordance with our quoting policy. We have a comprehensive system to detect plagiarism and will take legal action against any individuals, websites or companies involved. We Take Our Copyright VERY Seriously!

Site Authored by