$GameStop (GME.US)$ hi guys what happens if you buy call the...
hi guys what happens if you buy call then the stock price goes up and you wish to exercise those calls but don't have the required liquidity. Do you have to sell them or is there an alternative? Thanks
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Ken Griffin Charity : 1. You sell them
2. You let them expire worthless
3. You deposit more cash into your account
4. You take out a margin loan
RIPPER : To be completely honest with you, it’s most always more worth it to “sell to close” than is to exercise. When you are at a point and unsure if it’s going to continue going up sell to close and then by X amount of shares with profit
RIPPER : And if you do not have the liquidity… No, you cannot exercise. Sometimes specific brokers may work out a situation with you, fidelity for example, if you called and asked. Let’s say you have the liquidity for 70 out of 100, I have heard they will work with you with them picking up 30 and you picking up the 70. However, I’ve never done that personally.
JeanMeg OP Ken Griffin Charity : Thanks. I was wondering if when you're in the money whether for example you 'exercise and sell' without actually buying them. but yeah the best thing you could do is to sell them I suppose
JeanMeg OP RIPPER : Yeah I like what you said sell to close sounds like a good enough option for us who don't have enough money to actually exercise them. I kinda like the realised nature of it thereby granting liquidity to your account and it doesn't keep you exposed as much.