Timeline for How does taking profits from a CALL option contract work?
Current License: CC BY-SA 4.0
4 events
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| Jan 15, 2020 at 15:33 | comment | added | Bob Baerker | "Wouldn’t any low cost platform user be able to buy/execute/sell to grab that difference?" Assuming that you mean a retail guy on a low cost platform then no because he can't buy the OP's call if it has been sold at a discount. But the market maker or floor trader could do so (see my answer for an explanation and example of such discount). When doing a discount arb, you'd do the equity trade first, locking in the numbers otherwise you'd have market risk for a few seconds between option exercise and equity closure. If not clear, ask away. | |
| Jan 15, 2020 at 15:13 | comment | added | JTP - Apologise to Monica♦ | I defer to your higher option knowledge. Asking - wouldn’t any low cost platform user be able to buy/execute/sell to grab that difference? | |
| Jan 15, 2020 at 14:38 | comment | added | Bob Baerker | It's not true that there will always be a time premium. Deep ITM options closer to expiration trade at a discount, often more than 5 cents. The less liquid the option, the worse the discount becomes. And if there is a pending dividend, an ITM call will trade at an even larger discount. | |
| Jan 15, 2020 at 10:27 | history | answered | JTP - Apologise to Monica♦ | CC BY-SA 4.0 |