111: Should I Buy Back My Penny Options Or Let Them Expire Worthless?

The Option Alpha Podcast

Kirk Du Plessis

Education, Options Trading, Trading, Investing, Stock Market, Business, Finance

4.8 • 1.2K Ratings

🗓️ 9 December 2017

⏱️ 28 minutes

🔗️ Recording | iTunes | RSS

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Summary

Show notes: http://optionalpha.com/show111 You made an options trade and the position has gone well, leaving you with a nice fat profit as expiration approaches. Now the question becomes, what do you do with these cheap out of the money option contracts you sold? Do you buy back your penny options or let them expire worthless? Are there risks to do one over the other and when should you lean one way or not? On today's show I'll talk through what our research shows about exiting trades early, ...

Transcript

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0:00.0	You're listening to the Option Alpha Podcast from Option Alpha.com where we show you how to make
0:06.3	smarter trades learn how the stock market really works and generate consistent monthly
0:11.2	income. Now your host and head trader at
0:15.0	option alpha.com Kirk depluses.
0:20.0	Hey everyone this Kirk here again from option alpha.com working every single week to make this the most popular investing podcast offered online and in iTunes because it's based on one thing and one thing only and that's helping you guys make smarter trades.
0:32.4	Again, thanks so much for tuning in today on today's show. only and that's helping you guys make smarter trades.
0:32.6	Again, thanks so much for tuning in today on today's show.
0:35.2	We are going to be tackling the topic of should you buy back your penny options or just let them expire
0:40.3	worthless.
0:41.3	In fact, this is a conversation that I literally just had with a
0:44.3	coaching client where we were looking at his account and we were doing screen
0:47.4	sharing and we saw you know that this I think it was an XBI position basically was
0:52.0	practically worthless it was like XBI position basically was practically worthless.
0:52.9	It was like five dollars of potential value and I said, you know, you need to close this thing
0:56.4	out.
0:57.4	You know, 15 days from expiration, there's no point and he said, yeah, but it's so far away,
1:01.2	so you know, why don't I just like expire worthless and back and forth we went and so I want to dive a little bit deeper into this topic today on the on the webinar and then also just kind of again
1:11.5	reemphasize some of the the things that we learned in our
1:14.5	profit matrix research which was really our biggest you know endeavor in
1:18.6	options trading research with all these different strategies and makeups of
1:22.4	positions when to exit, when to close, etc.
1:25.2	The first thing that I'll tell you though is I think generally as a course of business,
	...

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