How do i sell call options? exercise it or just sell at the new call option price.?

Question

1. say i already owned 1 contract Etrade call option strike(2 mths to expire)=3, premium=0.25. Now, the stock price is 2.85, and bid/ask premium=0.35/.4. Can i sell it at .35 premium or i can not cuz it's still out of the money call 7 need to wait until in-the-money call.

2. what do traders mostly do with options?. Wait until it's in the money call or let it expires worthless or sell at new option price.

3. If the call option is in-the-money. exercise the call or sell at the new premium is more profitable?? Many2 Thanx in advance....

Answer 1

<<<how do i sell call options?>>>

Use a "sell to close" transaction if you are selling an option you previously purchased.

<<<exercise it or just sell at the new call option price.?>>>

Unless the option is deep in the money there is almost always extrnsic value (also called "time premium") in the price so you will make more money (or lose less money) by selling the option instead of exercising it and them closing the stock position.

<<<1. say i already owned 1 contract Etrade call option strike(2 mths to expire)=3, premium=0.25. Now, the stock price is 2.85, and bid/ask premium=0.35/.4. Can i sell it at .35 premium or i can not cuz it's still out of the money call 7 need to wait until in-the-money call.>>>

You do not have to wait for it to be in the money. You can sell it now for $0.35. (Unless your commission is under $5.00 per trade that will create a net loss for you since your gross profit, before expenses, is only $10.00.)

<<<2. what do traders mostly do with options?. Wait until it's in the money call or let it expires worthless or sell at new option price.>>>

According to statistics I have seen frm the CBOE, most option contracts are closed before expiration. More options expire worthless than are exercised.

<<<3. If the call option is in-the-money. exercise the call or sell at the new premium is more profitable??>>>

Usually selling the option is more profitable unless it is deep in the money.

Answer 2

What do traders do with options? The answer is in the question-they normally trade them (rather than exercise)

Answer 3

You are still out of the money the strike price being @ $3. So if you sell the call now, the only thing you might collect is the time premium since you still have 2 months till expiration. You should hold the option and let it get in the money so that you can make more money. There are various use for option contract: to protect against downside in long stock position or against upside from short selling. I will be happy to answer  more questions ([e-mail])