Alan answers a question posed by Jim M, who asks:
When our strike price moves deep in-the-money as stock price increases early in the contract how do we decide if we should close the entire position and take profits or roll the option out-and-up? As an example, I bought CRM at $133.31 on January 3, 2019, and sold the February 15, 2019, $130.00 call option for $9.35. On January 9th the stock price was $146.36, and the option was priced at $18.20. What would you do?
Thanks for all you do,
It’s the 2nd Wednesday of the month. Time for another original episode of Ask Alan. AA#158, “ Profit-Taking Versus Rolling In-The-Money Options Early in a Contract”
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