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Entry Orders

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Market -



Limit -



Stop loss (to buy) -



Trailing stop loss (to buy) -



Multileg -



Good Til Canceled -



Conditional Orders

Index -

One Triggers The Other (OTO)
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Exiting Options Positions

Long Positions

An option position can be closed at any time before opex. However, many strategies may intend to
exit on opex day. If the account holds any long ITM options that expire on opex day, 3 things can
happen on that day; 1.) they can be sold by the holder, 2.) they can be exercised by the holder, or 3.) if
no action is taken, they can expire worthlessly and the holder gets nothing. Because of the latter, it is
very important to make sure that if the account holds any ITM options that may expire that one of the
former actions be taken by or on opex day.

Short Positions

Similarly, to a writer who has short positions in ITM options 3 things can happen 1.) the writer can
buy back the written options to close out the positions, 2.) the writer can do nothing and allow them to
be exercised by the purchaser in which case the writer will need to either sell stock at the call strike
price in exchange for the premium on any written ITM calls or forfeit cash to buy stock at the put strike
price in exchange for the premium on any written ITM puts or both , or 3.) the options can expire and
the writer keeps any credit premiums. However, most ITM options will be exercised and are unlikely
to expire worthlessly. If the writer doesn't want to take possession of the stock he will need to buy
back any written ITM options before close of buisness on opex day.

One of the things to be careful of is when earnings announcements are scheduled a few days before
opex. There can be large swings in the stock price as a result of earnings results. And therefore
profits and losses on options can swing wildly from the day before announcement to the day of or
after announcement. Some strategies are established specifically to take advantage of these
swings. It should be understood in these situations there is only a day or two to act upon the
positions accordingly. Also, US options can be exercised anytime. A holder of an ITM option may
choose to exercise and exit before earnings are announced.

Exit Orders

Stop Loss (to sell)
- stop losses are an order that becomes a market order once the fixed stop limit
or fixed percentage is hit. These are used to protect a long position from a drop in price. Stocks and
options can also be bought using trailing stop losses. They are only executable during normal
trading hours. The short coming is that prices for stocks and options can gap up or down from the
previous days closing to the following day's opening.

Trailing Stop Loss (to sell) - is an order that gets executed when the price falls a fixed amount. As
long as the price is rising in a long position, the trail amount will follow it. Once the the long stock or
option price starts to fall, the trailing stop loss is fixed. These are used to protect a long position from
a drop in price. Stocks and options can also be bought using trailing stop losses. They are only
executable during normal trading hours. The short coming is that prices for stocks and options can
gap up or down from the previous days closing to the following day's opening.





Expiration -
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