Tuesday, July 19, 2011

Buying Options Question?

Let's say for example I buy a call option of APPL at a strike price of 345 (expire May 20), premium roughly 2. Let's say I only had enough $ to buy the calls, but not enough money to actually buy the 100 shares of Apple at their current price of $340 or the strike price of $345. So let's say that I buy the call (the right to buy 100 shares of Appl at $345 before the expiry date) and Apple jumps to $350. Will I just be able to sell the call to someone else who will exercise the option (because he has the money) and make just as much profit as I would have made if I were able to actually exercise the option myself? Or do I HAVE to have the money and be able to afford the shares? Would the option just expire worthless because I cannot afford to exercise it or what?

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