Originally Posted by
Columbia
Have you ever bought/sold options before? It's NOT like you are holding 3,000 shares at 14.53. You simply have the OPTION to purchase 3,000 shares at 13. IF you exercised the option, you would then have to pony up $39,000. Of course if the price then hits $19, the account value would then be $57,000. If sold at $19, the profit would be $13,410.
Right now, you just own the options. You paid $4,590. As the Feb options close Friday, an underlying stock price of $19 would show your 13 strike with a price of around $6. If you simply closed the position (automatically closes at the end of Friday), the proceeds would be approximately $18K for a profit of $13,410.
One big difference is the tax implications. You pay short term gains on closing the contract. If exercised (you buy the underlying stock at $13), there are no tax implications until you then sell the shares.
Come on, I have been trading options for 20 years! Give me a break!!! I know what I hold. No tax implications since it was done in an IRA. I have done option strangles and spreads and sold naked puts, so please don't try to educate me on how to trade calls and puts. My DC plan went up 109% last year doing covered calls and other option strategies. Now maybe you can educate me on contango and backwardation and negative roll yield as it relates to the futures markets. I trade futures too, care to educate me on that?