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Options question

Discussion in 'Ask any question!' started by Jday1, Mar 29, 2020.

  1. Jday1

    Jday1 New Member

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    I use a webull cash account and would like to spend 15k and leverage it as hard as possible.

    If I buy 15k worth of calls on a stock and exercise that call would I have to come up with the full buying price of the stock? Or do I have to only buy enough options where I can cover the full buy price.

    Also do I have to buy the full amount or can I partially exercise it, say buy 30 shares of a contract and keep holding the rest? Thank you
     
  2. OldFart

    OldFart Well-Known Member

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    You can partially exercise it.
     
  3. Three Eyes

    Three Eyes 2018 Stockaholics Contest Winner

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    I know next to nothing about webull, so perhaps they allow partial exercise on standard options contracts?

    Otherwise, 1 contract = 100 shares. If you exercise a single Call that you own, you would typically need to have the funds to purchase 100 shares at your Call strike price.

    Now, if you have several contracts---let's say you own 5 Calls---and you only have the money to purchase 200 shares at the Call strike price, then you can exercise 2 of the Calls and sell the remaining 3 Calls.
     
  4. OldFart

    OldFart Well-Known Member

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    3 Strategies To Consider When You Exercise Your Stock Options
    There are three main strategies you can take when you exercise your stock options:

    1. Cash for stock: Exercise-and-Hold

    You purchase your option shares with cash and hold onto them. This gives you the maximum investment in company stock, providing you with potential for gains from increases in stock value and payment of dividends (if any). You may need to deposit cash into your brokerage account or borrow on margin to pay for your shares. You will also likely pay brokerage commissions, fees and taxes.

    2. Cashless: Exercise-and-Sell

    You purchase your option shares and then and immediately sell them. In many cases, your brokerage will allow this transaction without using your own cash, with the proceeds from the stock sale covering the purchase price, as well as the commissions, fees and taxes associated with the transaction. This choice provides you with cash in your pocket to put into other investments or use as you otherwise see fit.

    3. Cashless: Exercise-and-Sell-to-Cover

    You exercise the option and then immediately sell just enough shares to cover the purchase price, commissions, fees and taxes. Your resulting proceeds will remain in the form of company stock.

    https://www.upcounsel.com/exercise-stock-options
     
    #4 OldFart, Mar 29, 2020
    Last edited: Mar 29, 2020
    Three Eyes likes this.

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