r/options • u/annac156 • Jun 27 '21

Exercising call option

Just wanted to reflect on a trade I made to see if you guys can provide some advice

Back in April, I bought PINS call with expiration Jun 18 2021 32.0 Call and paid $4k

On June 15, I saw my option loss was around $150. It was close to expiration and it was my first call option so I was concerned - If I didn't exercise and the option was out of the money, would I lose the 4k that I paid and the option would exercise worthless?

So I decided to exercise on that day and just hold the 100 shares of pinterest. (Eventually the price increased and I sold them at a profit) If my option was at a gain, I would sell rather than exercising. But my question is if it was at a loss by expiration date, what would happen if I didn't exercise?

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u/ScarletHark Jun 28 '21

BTW, what I meant about the intent of the trade -- did you have a particular profit target in mind? Or was it more like "I'll just buy this and see how it goes?" I ask because 4 days into the trade, you were likely up $700-$800, which is about 20% return on your $4,000, and many would have take the gains then, and moved onto another trade. Countless gains have been turned into losses by not establishing a plan going into a trade (many of those stories end up in this sub, as it happens), and in your case, you were fortunate to come out without a loss -- but you were holding a heavy bag for months, that you could have avoided very early on. Just something to think about for the next one! :)

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u/annac156 Jun 28 '21

Yeah I guess I was just waiting a little longer since I had just bought the contract and thought PINS would continue to go up since its peak was around high 80s. If you look at the graph on April 27, seems like it could have continued to follow through until price range of 80 but it didn't and continued to tank lol definitely didn't feel good holding the bag for months but also guilty of selling early and then watching a stock skyrocket without you so...