Suppose the following scenario
I have an option to buy stock X for 20,000 Shares, The break-even price is reached at price 15.00
The stock is currently trading at 14.50, the paid for option price is the difference
Suppose I like this stock and want to hold it in my portfolio
I can either exercise the option or purchase it outright on the market,
but because it is such an large share purchase I might have liquidty issues.
Will exercising my option provide better liquidity as outright purchasing the stock on the market?
Will exercising my option provide better liquidity as outright purchasing the stock on the market?
Depends on how big the market is for the shares ofX
. For a million of shares traded a day, 20000 isn't much. But for maybe 100000 shares traded a day yes.