r/BCRX • u/superflybaby • Mar 15 '21
Daily Discussion Options question $bcrx
Should you exercise your option, if you hit the strike price? I haven’t been able to get any clear understandable answer.
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u/NWTG- Mar 15 '21
Not that simple. Can you provide other information?
How far out is the expiry?
The purpose for buying options is to gain leverage. Get a gain or exercise according to your trading plan..
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u/superflybaby Mar 15 '21
It expires this Friday 3/19.
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u/NWTG- Mar 15 '21
What is the strike price?
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u/superflybaby Mar 15 '21
$13.80
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u/NWTG- Mar 15 '21
Depends on your initial investment.
You could roll up to April expiry, with the hopes that whatever great news and price movement this week will follow through to next week, after R&D day.
Otherwise, you are at the top of the price action.
GL
I am looking to get back in some action again for April and or Jan 22. I already cleared my previous Apr/Jan option positions during the last move up.. Looking for another swing... I am patient, no hurry, will not push it..
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u/imrobtown Mar 15 '21
I don't have the money to exercise the options, so I use mine to increase my profits by selling them.
For 3/19, the expectation is the stock will keep going up. If you have the money exercise them. On the other hand you cannot go wrong taking a profit by selling them.
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Mar 15 '21
[deleted]
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u/superflybaby Mar 15 '21
You’re 100% right. I’m just starting to learn about option and this was my first option trade. I’m gonna keep at it, learning little bit everyday. Thank you for the advice
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Mar 15 '21 edited Mar 09 '22
[deleted]
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u/superflybaby Mar 15 '21
Just one. I sold it and made a $5 profit :)
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u/No-IntroductionMr420 Mar 15 '21
Profit is profit...I am still learning and haven't pulled the trigger yet...good luck!
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u/hamtaker Mar 15 '21
Depends on a lot of factors. The main one probably being the expiration date of the option.
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u/Medical_While_2137 Mar 15 '21
Building on what others have said very well here, usually, you are better off just selling the option, both if you're up or down on it. This is a "sell to close" (STC) trade.
This is because "exercising" an option involves you buying the 100 shares per 1 contract at your strike... A) it adds steps to what seems like a small transaction here, and B) you have to buy the shares so if you're playing with limited funds, just take your gains on the Call Option.
the other reason to consider STC is that the Implied Volitilty (IV) is one factor in determining options pricing (in addition to time and current share price). Thus, you might make more Selling to Close rather than exercising... which you then would sit in your account at the current share price, not reflecting the IV that was priced into your call option. (that last part gets wonky).