Question regarding BHP option

[clancyfish]

Hi,

I bought an April BHP option in Feb with a 28 strike @ 1.95. Not doing so great now - what would be the implications of selling an April option for 29 strike (selling at about .550 time of writing) on this option? Would this be a dumb thing to do? Needless to say I'm pretty much green at all this and have only started studying strategies.

 

[happytrader]

Hi Clancyfish

The implications of selling an April option with a 29 strike (obviously a call option) is that you will relieve your uncertainty and avoid the possibility of the option expiring worthless. Whats dumb got to do with anything? Next time, as soon as you think your trade is going the wrong way don't think, frontup, hit sell and get out of the way and avoid that detrimental state of uncertainty. Option trading requires specific entries, exits and time frames and an indomitable spirit.

Cheers
Happytrader

 

[Mofra]

clancyfish,

I assume you are talking calls - given you will be long the strike closer to the money, you're net delta position will still be positive, hence your trading position would be mildly bullish on BHP. If you are, then the strategy could be appropriate.

Cheers

 

[clancyfish]

Thanks for the input.