Do I have to hold options until they expire?

You can buy or sell an option whenever you want at its current premium, or market price — just as with any stock. When at option expires in the money, it will automatically be exercised by your broker. Theoretically, you can then sell your stock for the intrinsic value that your option had when it expired, less any commissions and exercise fees.

When you write an option by selling it short, you can be assigned if a buyer decides to exercise his option. Traders who are assigned are obligated to buy or sell shares of the underlying stock based on the option’s strike price. If the contract that you write is not assigned, it will expire worthless. This means we get to keep our income and no longer have any obligation to buy or sell shares.

Zach has put together a great options basics cheat sheet that you can read here.


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