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Home Forum Commodity Options Offset of a Commodity Option

Offset of a Commodity Option
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10:03 am
July 12, 2010


Optiontrading

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Most traders who have invested in in-the-money-
options realized their accrued profits by the resale of those options. This is
known as the offsetting of option positions. Most investors who purchase an
option will generally offset their option position instead of exercising it. They
do this to avoid loss of any leftover time value as well as the margin
deposits, commissions, and resultant decisions from assuming the futures
position in the market. The investor can resell the option to another investor
at some premium that at least equals to that intrinsic value resulting from the
in-the-money price relationship.
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