The question may have been answered in passing but I could not find an explicit post that answered this.
My question is this: is the intrinsic value of an option (the underlying value minus the strike price for a call option, and the strike price minus the underlying value for a put option, as I understand?) equal to the same value if I were to for example exercise the option outright and then sell? Does selling a call option in the money at the expiration date have the same value as exercising the option, paying for the underlying security at the strike price, then selling it (assuming no additional commissions and the market doesn't move during this time)? This is why there is more leverage with options, correct? For a long call option, the cost for the option is lower than the 100 securities it promises to call, but the profit you would make if you were to buy then sell those 100 securities is the same?
Finally, futures - the contracts cost $4.50/contract at Schwab. Is this reasonable? How much does a futures contract typically cost? With a $4.50 contract can I expect a lot of leverage or would I need to buy more than that? I understand a contract can have an underlying value in the tens of thousands.
Thanks reddit!
Submitted December 08, 2017 at 09:14AM by PM_ME_YOUR_FUGACITY http://ift.tt/2A388ql
