Options Question

[Myth465]

Hi all,

 

Quick question. What do you do when you want to sell options, but they trade with no premium or a negative premium. I feel the price is good and want to book my gain. 

 

I have heard you can exercise and sell covered calls, if you want to hold or exercise and sell if you dont. Are those the best options?

 

Also if the options trade with no premium, how would you be able to sell calls?

[Guest Bronco]

You should probably talk to your broker, but they should allow you to excercise your long call options to buy a stock.  They should also let you sell stock if you own puts. 

 

A similar approach would be to simply sell the calls or puts you are long, but it sounds like you may have a liquidity issue (the options don't trade frequently and the premiums may be out of whack).

 

Only you can answer the buy/hold/sell covered call decisions. 

 

Hope this is a little helpful.

[Myth465]

Thanks Bronco, I will put in a call to my Broker.