Two questions for people who do options trading more regularly.
Dipped my toe into options by buying 2 call options a few weeks ago that expire today.
One is in the money slightly above the breakeven of $21.07 (strike of $20.50) and one is slightly out below the breakeven of $21.77 (strike of $21).
Does it matter if I exercise the one that's in the money this morning vs letting Fidelity deal with it at expiration? I transferred enough cash to the account to buy the shares. I plan to hold the stock longer and set a stop loss on it rather than selling immediately.
Similarly for the option that is out of the money. If the stock is at $21.50 and I still want to buy more, would I not be better off exercising the option to buy at $21 rather than letting it expire and buying at $21.50?
If the stock is at $21.50 and I exercise the option it seems like I am effectively losing a portion of the premium instead of all of it if I let it expire then buy?
Cost at market - $2,150 + $77 lost premium = $2,272
Exercise Option = $2,100 + $77 = $2,177
If anything in my logic is too out of whack feel free to comment also. The majority of my "investing experience" is putting money into an index fund in a 401k each week so I don't claim to be an expert at this.