This is a hypothetical situation, I'm not actually in this position. I'm also an amateur with this, so correct me if I make any mistakes.

Let's say a stock is $100. You buy $4,000 worth of $0.50 call options with a strike price of $102. This is 8,000 options.

Now let's say the price of the stock goes up $5. You want to exercise your options to get a profit of $20,000. This means you have to pay $816,000 to buy your stock at the strike price. What does someone do if they don't have $816,000? It's an interesting situation because they don't have the money, but they are guaranteed to make a profit if they did.

  • 2
    You sell the option itself. money.stackexchange.com/q/48934/24920 The option's price isn't set in stone at $0.50. The call option's price increases as the stock price increases. P.S. 1 Option contract has rights for 100 shares. – base64 Oct 21 '15 at 15:06

The fact that the option is deep in the money will be reflected in the market price of the option so you can just sell it at a profit. If there's a (n almost) guaranteed profit to be had, however, you can always find someone who will lend you the money to cover the exercise... they'll charge you interest, however!

Not the answer you're looking for? Browse other questions tagged or ask your own question.