Booking Options Gains: The Basics

Thanks to a strong earnings season, we’re in position to maximize profits as the major averages attack new highs.

So, I want to take some time today to answer a question from a newer trader.

I recently had one of my premium readers ask what happens to his position after he sold his Twitter calls for a gain. Specifically, he wanted to know if he had any obligations to buy shares after getting rid of the calls.

Fair question! When you’re new to buying call options, it can be confusing as to whether or not you may have to purchase shares.

But if you’re trading for short-term gains, you’re probably not in the business of holding shares of stock — only options!

Once you’ve sold ALL of your contracts like my reader did with TWTR, you no longer have any obligations towards your position.

That means you don’t have to worry about the expiration date, buying shares of underlying stock, or the option’s price after you sold it.

The position will leave your portfolio. And just like that, you’re out of the trade!

You can put your winnings towards the next recommendation — or something else you’ve been saving up for.

Keep it In the Money,

Alan Knuckman

Alan Knuckman
Editor, In-The-Money

Chart of the Day: Pot stock revival

Greg Guenthner
The mania continues.

We talked hot EV stocks, microcap runners, and the aftermath of the GameStop phenomenon earlier this week.

Now pot stock investors have the hot hand.

Cannabis names have blasted higher all week – and the theme continues to pick up interest among the Wall Street Bets gamblers.

So far, their desire to squeeze these names is working beautifully.

A little positive news has also sparked more interest in the sector…

“Some stocks from the cannabis segment received another shot in the arm as third-quarter fiscal 2021 results of Canopy Growth Corporation renewed hopes of legalization of cannabis at the federal-level in the United States,” reads a report on Yahoo Finance. “The company stated on its earnings call that it is accelerating its U.S. growth strategy in anticipation of removal of the federal ban on cannabis products in the country.”

As federal legalization chatter gets louder, many of the cannabis names – especially the speculative ones – are ripping higher.

To get a feel for the just how powerful these rallies have been, check out the popular Alternative Harvest ETF (NYSE:MJ):

MJ

Much like GameStop, we’re dealing with a parabolic move in pot stocks right now. You have to shorten your timeframe with these YOLO stocks. Take profits early and often if you have the guts to play them – and don’t get left holding the bag!

— Greg Guenthner

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Alan Knuckman

Alan hails from the home of options trading in Chicago, where he began working as a clerk on the floor of the Chicago Board of Trade (CBOT). Beginning with his days on the floor, Alan’s worked with all aspects of the options markets for the past 25+ years.

Transitioning from a clerk to a floor...

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