Closing Your Options Positions

Once you own an option, there are two methods that can be used to make a profit or avoid loss: close it out (that is, sell it back) at the current market price, or let it expire.

Closing out

Closing out is a method of reversing the original transaction to exit the trade. If you bought a call, you have to sell the call with the same strike price and expiration.   If you bought a put, you have to sell a put with the same strike price and expiration. GCI's online trading system makes it easy to sell back the exact option which you bought.  You simply find it in the Options window on your trading platform, and right-click on it to select "close".

Expiration

Expiration - if an option has no value at expiration, and it has not been closed out, the option expires worthless and no further action is required.  If an option is "in-the-money" at expiration (meaning that for a Call, the underlying currency price is above the strike price, or for a Put, the underlying currency price is below the strike price) then your account will automatically buy the currency instrument at the strike price (for a call) or sell the currency instrument at the strike price(for a put).  Such in-the-money expirations will always result in a profitable underlying currency position, and this currency position can immediately be closed out for a profit if you do not wish to maintain this outright position.

Summary

Exit the option position by closing:  

Right-click on the position for a live current market price at which you can sell back the option you have purchased

Exit the option position by letting it expire:

Call:  If the underlying currency rate is above the strike price, your account will automatically buy the currency at the strike price.  You can then sell this currency at the current market price for an immediate profit if you wish.  If the underlying currency rate is below the strike price, then the option expires worthless and no currency position is established.

Put:  If the underlying currency rate is below the strike price, your account will automatically sell the currency at the strike price.  You can then buy back this currency at the current market price for an immediate profit if you wish.  If the underlying currency rate is above the strike price, then the option expires worthless and no currency position is established.

Click here to view an example trade using the ICTS platform.

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