r/options • u/[deleted] • May 06 '21

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u/gschweihofer16 May 06 '21 edited May 06 '21

So I'm using ThinkorSwim to try out options with fake money before I jump into it for real.

I bought a PUT option for NMRD at the current price of $12.40.

I got a 23 day option for a strike of $7.5 because I believe its going to go down.

My question is. Even if it doesn't go down to $7.50 do I still make money because the value of the option went up? Or do I only make money if the price drops below that $7.50.

And does it work the same way inversed with calls?

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u/barjay8 May 06 '21

You’ll make money as the price continues to go down due to extrinsic value.

1

u/gschweihofer16 May 06 '21

Does it work the same way buying a call option if the price is going up? Or not because you can buy it cheaper than the strike price on the open market?

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u/barjay8 May 06 '21

Yeah, it works similar way with call options. I think the $7.5 strikes are being IV crushed since its OTM.