I use Schwab Street Smart Edge, if you use a different platform, it may be different. There are two places I look to determine the remaining value left on my options.Centeron631 wrote: ↑Mon Jun 13, 2022 4:54 pm LoriPrecisely wrote " I now understand how to buy to close, also."
LoriPrecisely i must admit i have not mastered that yet and not sure i understand completely ... maybe U can explain and i take it that this is in reference to the cash sell puts, and the covered calls. First i am not sure how to read the existing positions in the portfolio - ie what do i look for in gains/loss or other to determine if the buy to close is appropriate or beckoning? and also if it has something re cash put sells as to whether or not one wants to own or not own at the strike price???/ Also did u end up being assigned on the Assan 22.50 as it is the 18's this AM?
You mention u own 7 put and 3 calls - r those the writes or just those u bought on the market? thks
1. In my account tab, under Positions tab, I can select whatever information I want to be visible. I selected Cost for one column, and P & L for the other, among many others. I put these two next to each other because Cost shows the premium I sold the Put or Call for, and the P & L (profit and loss) shows the value of the option I have earned so far.
2. In my trade ticket window, which I have open all the time, I select Option Chains. Then I select either Put or Call, not both, because I don't want to make a mistake and sell a Call when I want to sell a Put. Almost did that once. Next to the Option dollar amount that I purchased, under the expiration date which I purchased it for, there is a small button, which, when I click it, shows what I sold that Option for and what I have earned for it so far. Then, I just do the math to see what it would cost me to close it.
Or, looking at the Options chain, I can see what that Option is worth today, then I know what it will cost me to close it. Sol, mentioned closing at approximately 30% profit, and there are many factors that influence this decision, such as current market price, price to close and time left. I have followed his advice to only sell Puts on stocks you won't mind owning.
I understand now that you can make money just trading options without even owning the stock. So, I am having fun doing that right now. I do own many stocks, and I don't mind owning more Asana, but I am taking this time to practice opening and closing, and paying attention to how the premium is influenced by the stock price. And, how Sol said, Sell Puts on Down days and Sell Calls on Up days. It really does affect the premium a lot.
And, also how the premium ultimately reduces your overall cost basis if you do have to buy the stock. For example, I am looking at an August 19 expiry for a Put for $20. strike price, the premium is 4.45. So, if that option got put to my account, my cost per share is only 15.55. The $20 strike is above the current market price, but that option does not expire for 2 months. A lot can happen by then.
It is rare for an option to be exercised before expiry. I am just now learning about this and trying to understand it better, but it is because the Buyer of the Put had to pay a premium for his side of the contract, so because of the time value of his option and the difference between the premium he paid and the market price, he may not exercise. Like I said, I am just beginning to understand this part of it, so maybe someone else can contribute here.
I have only sold Puts and Calls so far. When I say I Buy to Close a Put or Call, it is like closing the contract I had opened when I Sold to Open a Put. I have not bought to Open any options....yet.
It is important to choose, and get familiar with your trading platform. Some of the brokers I have talked to at Schwab prefer trading on the web platform, and others prefer the downloadable platform. I definitely prefer Street Smart Edge. I downloaded it unto my desktop. I have seen Interactive Brokers platform displayed on a YT video, and it is a lot different than the Schwab platform. I encourage you to get familiar and comfortable with your platform, and if you have any more questions, or if there is something I did not answer completely, don't hesitate to ask.
Another thing I have done that I have found really helpful is, copy the conversations in the forum that are interesting to you, and paste them into a Word document. Then, you can easily look at them when you are working on your platform and have a question.
