After I buy an options call, what do I look for in order to sell it?

Answer 1

A higher price on the item the option is on.

I buy an option on Whoopededo stock at 40.
When I bought the option "out of the money", the stock was about $36.00/share. When it reaches 40 or more, then the option is "in the money" and the value of the option rises. You simple select how much higher the option will be before you sell the option or exercise it. Now you have to watch the expiration date or the whole deal flies out the window and you have nothing.
Personally, I just sell the option. Exercising options is such a pain.

Answer 2

It is not clear to me if you asking what the procedure is to sell an option or if you are asking how to deterine when you would want to sell it.

The procedure to sell an option is to submit a "sell to close" transaction. Just as with stock, it can be a day order or a good-till cancel order, a market order or a limit order.

Everybody had his own way of determining when is the best time to sell. I usually try to pretend do the same thing I do with a stock. I ask myself if I did not own this, would I want to buy it for the current price? If the answer to that question is "no", then I sell it.

One thing about long option positions is that usually I do not want to own them as expiration approaches. I want to sell at least one week before expiration, preferably two or three weeks before. That way I avoid the fastest decay of the premium due to the passage of time.

I try to avoid considering how much profit or loss I have when deciding if I want to sell. If an option is selling for $2.00 and I don't think it is worth $2.00 I believe I should sell it, and that it doesn't make any difference if I paid $1.00 or $3.00 when I bought it. If it is not worth $2.00 it is not worth $2.00.

Answer 3

If you start an investment by buying something for X dollars, you're usually looking to sell it back for more than X dollars. The amount you sell it back that is more than X is called your profit. If you end up selling back what you bought for less than what you paid, you have taken a loss.

There are costly common mistakes involved with trading options, including buying them without being familiar with the concepts of time decay and implied volatility. In many cases, you can end up buying a call, having your underlying asset actually go up (which should mean, theoretically, that your call goes up in value), but you might end up LOSING money due to changes in volatility and the continuance of time decay.

I strongly suggest you get educated on options before you try to trade them with real money.