Exerise or not to exerise-Question - futures io
futures io futures trading



Exerise or not to exerise-Question


Discussion in Stocks and ETFs

Updated by wldman
    1. trending_up 1,141 views
    2. thumb_up 12 thanks given
    3. group 2 followers
    1. forum 11 replies
    2. attach_file 0 attachments




Welcome to futures io: the largest futures trading community on the planet, with well over 100,000 members
  • Genuine reviews from real traders, not fake reviews from stealth vendors
  • Quality education from leading professional traders
  • We are a friendly, helpful, and positive community
  • We do not tolerate rude behavior, trolling, or vendors advertising in posts
  • We are here to help, just let us know what you need
You'll need to register in order to view the content of the threads and start contributing to our community.  It's free and simple.

-- Big Mike, Site Administrator

(If you already have an account, login at the top of the page)

 
Search this Thread
 

Exerise or not to exerise-Question

(login for full post details)
  #1 (permalink)
Dallas, TX
 
Experience: Intermediate
Platform: NT, TS
Broker: IB, Oanda
Trading: ES, MES, MNQ, MYM
 
kareem40's Avatar
 
Posts: 653 since May 2010
Thanks: 1,864 given, 870 received

Hi
Earlier this week, I bought a couple of options on AAPL. Earlier today dividends were announced. so I got this message from IB :
"Dividend-Triggered Option Exercise Advisory"

Basically saying I can exercise and collect dividend. How would you make that call? What factors will make you decide either way. My calls are at BE but with today's action, they should be ITM tomorrow. I only have two more days to expiration. I have two calls and dividends are .77
I am asking because I don't know what to do! This is a first for me.

Thanks,
K

Follow me on Twitter Visit my Facebook Visit my futures io Trade Journal Reply With Quote

Can you help answer these questions
from other members on futures io?
Options Backtesting Software with Market Replay tool/feature?
Options
TOS Custom Implied Volatility Rank Watchlist/Scanner Column
ThinkOrSwim
TOS script
ThinkOrSwim
Data Feed sharing possible between TS/IB and 3rd party apps?
Platforms and Indicators
FYI plot bug & workaround: changing color or width is delayed 1 bar
EasyLanguage Programming
 
 
(login for full post details)
  #3 (permalink)
Legendary Market Wizard
Chicago Illinois USA
 
Experience: Advanced
Broker: IB, ToS
Trading: /ES, US Equities/Options
 
wldman's Avatar
 
Posts: 3,222 since Aug 2011
Thanks: 1,878 given, 7,948 received


Do you want to own AAPL stock?

That is the primary question here. I do own AAPL. I am also short puts, which is a bullish position.

So, if you are cool owning AAPL at your strike, and you are ITM do the early exercise and collect the dividend if doing so is a beneficial workout. .77 is the calculus as that is what you get in dividends.

How much could you sell next friday same strike calls for. You could collect the dividend and that premium. Where are the same strike same ex puts?

No pun intended, there are a lot of options.

Do you have an opinion on the stock?


Visit my futures io Trade Journal Reply With Quote
The following 2 users say Thank You to wldman for this post:
 
(login for full post details)
  #4 (permalink)
Legendary Market Wizard
Chicago Illinois USA
 
Experience: Advanced
Broker: IB, ToS
Trading: /ES, US Equities/Options
 
wldman's Avatar
 
Posts: 3,222 since Aug 2011
Thanks: 1,878 given, 7,948 received

as a strategic investment. I would make a little work out table to understand what outcome was most consistent with my goals and opinion on the stock.

-Dan

Visit my futures io Trade Journal Reply With Quote
The following 2 users say Thank You to wldman for this post:
 
(login for full post details)
  #5 (permalink)
Dallas, TX
 
Experience: Intermediate
Platform: NT, TS
Broker: IB, Oanda
Trading: ES, MES, MNQ, MYM
 
kareem40's Avatar
 
Posts: 653 since May 2010
Thanks: 1,864 given, 870 received

Hi Dan,
I do like Apple as well, but 200 shares would use up all of my capital plus margin. I a little out of the money still, but if I did exercise I can sell the following day. Of course with all the volatility we have this week, I am probably better off getting out of my calls with profit. Assuming, we move up tomorrow!
Thank you very much for the feedback and now I know that I should never buy a stock, just sell the puts until assigned. Seems like a good way to buy at discount, right?

Take care,
K

Follow me on Twitter Visit my Facebook Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to kareem40 for this post:
 
(login for full post details)
  #6 (permalink)
Legendary Market Wizard
Chicago Illinois USA
 
Experience: Advanced
Broker: IB, ToS
Trading: /ES, US Equities/Options
 
wldman's Avatar
 
Posts: 3,222 since Aug 2011
Thanks: 1,878 given, 7,948 received

selling puts is a way to participate long, just like buying the calls.

Generally most options are bought by retail and sold by the floor. There are many nuances but I look to sell high implied volatility (high premium) and buy lower implied volatility options.

In a nut shell, if you get a double on your long calls sell half. This position has only two days left so decay (theta) will work against your longs real fast.

You are correct, if your calls go in the money they will move almost lock step with the stock. Still plenty of time to have a big day % wise. BUT if they are not in the money pretty quick you might want to sell them or roll to next week if it's not too expensive.

Good luck. Let me know if I can help.

-Dan

Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to wldman for this post:
 
(login for full post details)
  #7 (permalink)
Dallas, TX
 
Experience: Intermediate
Platform: NT, TS
Broker: IB, Oanda
Trading: ES, MES, MNQ, MYM
 
kareem40's Avatar
 
Posts: 653 since May 2010
Thanks: 1,864 given, 870 received


wldman View Post
selling puts is a way to participate long, just like buying the calls.

Generally most options are bought by retail and sold by the floor. There are many nuances but I look to sell high implied volatility (high premium) and buy lower implied volatility options.

In a nut shell, if you get a double on your long calls sell half. This position has only two days left so decay (theta) will work against your longs real fast.

You are correct, if your calls go in the money they will move almost lock step with the stock. Still plenty of time to have a big day % wise. BUT if they are not in the money pretty quick you might want to sell them or roll to next week if it's not too expensive.

Good luck. Let me know if I can help.

-Dan

Very good information Dan. I may take you up on again on the "let me know if I can help." Again, thank you.

K

Follow me on Twitter Visit my Facebook Visit my futures io Trade Journal Reply With Quote
 
(login for full post details)
  #8 (permalink)
Legendary Market Wizard
Chicago Illinois USA
 
Experience: Advanced
Broker: IB, ToS
Trading: /ES, US Equities/Options
 
wldman's Avatar
 
Posts: 3,222 since Aug 2011
Thanks: 1,878 given, 7,948 received

tag me and I'll do my best if I have anything valuable to share.

Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to wldman for this post:
 
(login for full post details)
  #9 (permalink)
Legendary Market Wizard
Chicago Illinois USA
 
Experience: Advanced
Broker: IB, ToS
Trading: /ES, US Equities/Options
 
wldman's Avatar
 
Posts: 3,222 since Aug 2011
Thanks: 1,878 given, 7,948 received

@kareem40

I think you should be ITM on those long AAPL calls.

Way to go man. Please report how you did.

Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to wldman for this post:
 
(login for full post details)
  #10 (permalink)
Dallas, TX
 
Experience: Intermediate
Platform: NT, TS
Broker: IB, Oanda
Trading: ES, MES, MNQ, MYM
 
kareem40's Avatar
 
Posts: 653 since May 2010
Thanks: 1,864 given, 870 received



wldman View Post
@kareem40

I think you should be ITM on those long AAPL calls.

Way to go man. Please report how you did.

Hi Dan,
They are doing okay, but since they are out of the money ( 202.5) and expiring tomorrow. Theta is doing its thing. I have a profit limit and, with no new Trump tweets, I should be out with some profit. But not much. I will post my P&L in the Journal, later today.
Again, thanks for all the help. I decided not own Apple, for now.

K

Follow me on Twitter Visit my Facebook Visit my futures io Trade Journal Reply With Quote
The following user says Thank You to kareem40 for this post:


futures io Trading Community Traders Hideout Stocks and ETFs > Exerise or not to exerise-Question


August 8, 2019


Upcoming Webinars and Events
 

Every journal equals ten meals for the hungry

Now
     



Copyright © 2020 by futures io, s.a., Av Ricardo J. Alfaro, Century Tower, Panama, +507 833-9432, info@futures.io
All information is for educational use only and is not investment advice.
There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
no new posts