Question about excercising stock otions?

Question

Say I own a call on stock XYZ. It has a strike price of $150.

The stock is currently trading at $149.

Am I allowed to excercise my stock options, even if they're not yet "in-the-money"?

-regardless of whether this is a good decision or not (I know it would usually be better to sell the call and buy the stock)

Answer 1

<<<Say I own a call on stock XYZ. It has a strike price of $150.

The stock is currently trading at $149.

Am I allowed to excercise my stock options, even if they're not yet "in-the-money"?>>>

Assuming you are talking about a listed option traded on an American exchange you may exercise it. There is no law against giving money away.

Answer 2

You may exercise your option at any time. That is why you paid a premium for the option.

The only reason I can see to exercise an out of the money option is if it so close to being in the money that you would pay more in commissions to purchase the stock outright than it would cost you in lost money to exercise the out-of-money option. Since I pay less than $10 in commissions, that is unlikely to happen.