Options newbie, whats its called when I sell just an option I bought previously?


Junior member
Options newbie, whats its called when I sell just an option I bought previously? Say I bought an option for a particular stock, and that stock went up, now I want to sell my option for a profit, rather than buying the stock.

Are options typically done with ETF's as well as stocks, or mainly just stocks?
There are options on many things. What you're doing could be called many things, such as "unwinding your position", "taking profit", etc.

I thought this was appropriate (and I am a fan)...

* Image copyright etc applies
Is it common to sell options though? How exactly would I sell an option that I have? (I use ameritrade).
to be honest if I were you I'd call your broker and have this conversation with them. it will cost you extra commissions but in this case it is worth having someone else do the execution for you.

Just call them up :)
Is it common to sell options though? How exactly would I sell an option that I have? (I use ameritrade).
Of course, it's common... You sell it by hitting someone's bid in the mkt on the exact option you hold, in the quantity you hold. It works exactly the same way as outright futures or stocks or whatever.
It is called a buy to cover

You should be very careful selling options if you are not sure what you're doing.
Hi there

Oh dear -- there's a HUGE amount of confusion if not downright obfuscation on this matter.

"Newbies" in options should stick to SELLING options rather than BUYING until they gain more experience.

Buyers lose 85% of the time so SELLERS must conversely WIN 85% of the time. Buyers are usually large institutions / hedge funds who basically are protecting themselves against large losses -- in other words they are paying an "insurance premium".

As a SELLER you are acting as the Insurance company so you get to collect the premiums.

SELLING Options is actually LESS risky than a lot of other investments - (Here I'm talking about cases where you OWN or in the case of a PUT are prepared to BUY the underlying asset at the strike price.)

SELLING a CALL simply means that say you own 100 shares of Microsoft. Say its currently trading at 25 USD.

You Gurantee to SELL your shares at say 26 USD (known as the strike price) for which you receive a premium of say 50 cents a share. You guarantee to sell these shares for this price until the option expires -- every Friday in the case of WEEKLY, or on the 3rd Friday of every month for standard Monthly options. There are longer term options but I'd leave these to more sepecialized investors.

The BUYER of your option can exercise his right to purchase your shares at the agreed price any time until the option expires -- but in 99% of cases this won't happen until the expiration date. (Shares are CALLED away from you).

On expiry if the BUYER hasn't exercised the right to purchase your shares, then you get to keep the premium -- pure profit. Note you keep the premium REGARDLESS whether the shares are called away or not and its added to your account IMMEDIATELY you have sold the option.

if you ARE called then the shares will be transferred from your account for which you will receive the agreed strike price. You keep the premium regardless.

In the case of CALLS you MUST HOLD the stock -- otherwise you could have an INFINITE liability ("Naked Call").

The stock could go up to 1,000,000 USD -- and you must still supply the shares at the strike price you agreed say 25 USD !!!!. Most brokers won't allow beginning investors to do Naked Calls so you shouldn't worry here.

Selling PUTS is the same but in reverse.

You agree to BUY the shares at the agreed strike price (the shares are "PUT" to you) for the agreed premium.

With PUTS you only need to have sufficient money in the account to BUY the shares at the strike price less the premium -- usually if you are careful you won't get PUT so effectively you are making money for NO MONEY DOWN.

If you do SELL PUTS only do this if you feel comfortable if you have to own the stock at the strike price.

If you do get "PUT" and the share starts rising then SELL a CALL on it.

Trading Options carefully is actually the nearest thing in the universe you'll find to a Perpetual Motion Money Machine.

In some way I'm glad there is confusion on options -- since it means those who DO trade these can make more money.

You need tranches of 100 shares = 1 contract to trade US options.

With OPTIONS as a beginning investor go for certain smallish amounts initially -- drip feeding 200 or 300 USD into an account say 2 times a month will soon increase your capital and you can buy more contracts.

Oh no, not this sh1t...

Hi there
not sure what the problem is here -- I'm trying to help a Newbie - Options are relatively simple for some people while others have considerable problems in both understanding what they are and how they work.

I was trying to explain ito a newbie in fairly simple understandable terms what these are and how to make a SMALL amount of money safely and regularly in trading these.

AFAIK I haven't expressed any thing here that is in error or likely to mislead anyone.

If this is the attitude one gets on a Forum which is trying to HELP people - especially Newbies -- and in one's OWN time then it's not worth being part of this community.

If misleading information has been posted then buy all means point this out -- but a simple generic criticism doesn't help ANYONE.

If the post is too elementary as it will be for experienced traders then don't read it - I'm sure we all had to start learning out trading somewhere and probably we never stop lthe learning process as there are always new ideas etc.

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well look obviously the probability of an option ending up OTM at expiry is 85% so fill your boots son!
Well, listen, jimbo, don't you think that describing options as a "Perpetual Motion Money Machine" is just a wee bit over the top? In general, you certainly can try to be a part of a community, but if you offer something which is blatantly misleading, be prepared to have someone respond.

Do you want me to point out the specific inaccuracies in your lengthy post?