Sir
I have a few basic questions
a. Example if Adani ent stock is at 2600 and if i sell a 2800 call having a premium of 195 and if before expiry if the 2800 strike premium is at 250 how do i close the pisition.
b. Can i just sell Adani call two days before expiry say at 3000 and if the premium is 10 and spot 2600 . I can sell 100 stocks and pocket 1000 premium and wait for two days to ensure the call expires worthless so i pocket the full premium.
Regards,
Mukesh
Hey @Mukesh2
Since you have sold the call at 195 in order to close/exit the position you will have to buy the contract back at 250.
Yes you can short/sell the contract 2 days before expiry and pocket the entire premium in case there are buyers available when you sell.
If you are new to options and would consider learning more on it you can refer to this Varsity link.
Thanks a lot for the prompt response
In the first instance if the spot moves to 2800 and premium goes up to 250. If i buy back the option then i would be making a loss as my option recd is 195 aand option premium paid to buy it back is 250.
Please explain