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To: niceguy767 who wrote (200228)	6/3/2006 11:24:16 AM
From: DRBES	Respond to of 275872

30% in 2008 i really do not think that he plans to wait till 2008

To: niceguy767 who wrote (200228)	6/3/2006 11:51:27 AM
From: neolib	Read Replies (2) \| Respond to of 275872

Like you, I too am in trade mode primarily. (I especially enjoyed those May call options purchased the day of Dell's CC) I'm considering getting in to options in a limited way, so have been reading up a little. But I would like to understand some things which don't seem well explained. 1) Options here are "American" options, i.e. the right to buy at any time up till expiration. 2) I have seen three methods listed for exiting a purchased Call position: a) expire worthless, b) take assignment on expiration if profitably in the money, or c) sell a Call position of the same strike. What I have not seen is shorting the common, followed by purchase of the assigned shares. This would work even if the shares fell below the strike, since then you could simply purchase on the market to cover. Why pay the time premium of selling a call option as the means of exiting the position? There is another reason to short. As an example, take the May $32.5 calls which were quite cheap at one point the day before expiration, and were well in the money AH that day. If you sold call options in AH, there would still have been some time premium, since indeed, the stock opened lower on Friday, and dipped even lower before rallying to close at $35. However, shorting the entire call position might provide you with way more funds for the next day than your account holds. The funds are secure, since they are covered by the call position which will expire the next day. Assume that you had risked 10% of your funds at $0.05/share and made $2.5, which you shorted. This would give you 5x your total funds for the next day, prior to your choice of covering, either buying shares if they dropped more, or waiting for expiration if that was best. Do brokerages allow this, or will they not let you short the shares, since the value exceeds your account? TIA.