Put options employed in this manner are also known as protective puts. Every contract has an expiration date. 

This question was answered by Chizoba Morah. The net credit will be deposited into your account which will be equal to the number of shares x the strike price.

Covered Call 

Options trading uses terminology that an investor should understand before attempting to buy or sell options. The following example of a basic stock option contract quote will help explain some of this terminology.

Buying a call option Buying a call option feels a lot like wagering. Call buyers generally expect the underlying stock to rise significantly, and a call provides a greater potential profit than owning the stock directly.

First, the buyer could call the stock from the call seller, exercising the option and paying the strike price. The buyer takes ownership of the stock and can continue to hold it or sell it in the market and realize the gain. Second, the buyer could sell the option before expiration and take the profit. If the stock finishes below the strike price at expiration, the option becomes worthless.

Selling a call option Call sellers have an obligation to sell the underlying stock at the strike price until expiration. The call seller must have one of these three things: Call sellers generally expect the price of the underlying stock to remain flat or move lower.

If the stock closes above the strike price at expiration, the option is considered to be in the money and will be exercised. The call seller will have to deliver the stock at the strike, receiving cash for the sale. If the stock stays at the strike price or dips below it at expiration, the call option usually will not be exercised, and the call seller keeps the entire premium.

But on rare occasions, the call buyer still might decide to exercise the option, so the stock would have to be delivered. This situation benefits the call seller, though, since the stock would be cheaper than the strike price being paid for it.

Compare the best brokers for options trading Calls vs. Be careful, because if you do not have enough cash to cover this purchase your broker may charge you a hefty fee. This is an issue that option writers or sellers deal with. If you are short a put you may have to buy the stock at assignment if the put buyer decides to exercise her rights. Similarly, if you are short a call you may have to sell the stock for the strike price if the call buyer decides to exercise her option.

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Uses of the Option Buyback Function 

Avoid These 3 Big Mistakes New Option Sellers Make afylir.tk is one of the Featured on CNBC · Featured:Wall St Journal · Featured on WSJ · Featured on Forbes.

Get Instant Access to your Selling Weekly Options Strategy Guide & Video afylir.tk Risk Strategy · Protect Capital · Up to 35% Returns / Year · 98% Winning Trades. Holding an option through the expiration date without selling does not automatically guarantee you profits, but it might limit your loss. For example, if you buy a call option . 

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Option Functions

Buying or selling an option to close the option position before expiration is the most common outcome when trading stock options. Jul 30,  · Say I want to purchase an Aug call which is currently 10 cents. Say in a week from today the stock is at $26 and the option is worth $2. Can I sell that option, or do I need to wait until the expiration date?Status: Resolved.

Options traders can use these strategies to extend profits or reduce losses around options expiration day. How to Manage Expiring Options Positions (if it’s a call option) or sell shares. Sell a call before expiration - in which case the price of the option at the time of sale dictates how much profit/loss occurs on the trade. Exercise the long call - receive shares of stock at the strike price of the option.

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