Once you’ve opened an options position, you really only face three possible outcomes: you can close the position early, hold it until expiration and exercise, or simply let it settle at expiration.
Many beginners assume they need to hold their options until expiration. But in practice, experienced traders often close early. Why is that?
📒 Let’s see how The Options Handbook breaks it down in detail:
▶ Lock in profits or cut losses
Options don't just move with the stock price. They're also affected by time decay and implied volatility.
That means the option's value can change significantly even if the stock isn't moving much.
▶ Example
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Stock A trades at $100
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You buy a Call option with a strike price of $110, paying $10 per share
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Later, the stock rises to $106, and the option’s market value jumps to $20 per share.
👉 At this point, you could sell the option (close the position) and lock in 100% profit — no need to wait until expiration.
Conversely, if the stock falls or stagnates, that $10 option could drop to $5 or less due to time decay. Closing early could help you cut losses before they get worse.
🎁 For the other two exit strategies, check out The Options Handbook. Step by step, it helps you build your own options knowledge system. Now available in the Tiger Coin Center! 🐯📖
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>> Click here for the Simplified Chinese version <<
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