Hopefully I'm using the correct terminology in the title. I've been practicing buying and selling(or is it exercising?) call options on the OptionsXpress Virtual Trader with fake money.. hah!
I have a couple of simple questions that I can't seem to Google for properly.
Say I bought a 35 call option for ask of $0.60. Is it ever possible for the bid price to be >$0.60 AND the stock price be under $35? I'm just curious if I need to watch the stock price for it to go ITM before setting my Sell Limit.
Hopefully I worded this properly. What I'm trying to do is not buy the underlying, but take the profit and run... is that "exercising?" What is it called when you buy the underlying?
I've been reading several. This is confusing for beginners.
Does it have to be ITM for me to profit or can I sell below the strike price but above the premium I paid and profit?
What is it called when you exercise then immediately sell the underlying back to the market? On OptionsXpress there is only "Sell To Close" which automatically does that, there is no choice for buying the underlying without returning it to the market.
There are a couple of Options webinars on futures.io (formerly BMT) that cover the basics.
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