Closing Out

If you're a holder, you might decide to close out your position instead of exercising. To do so, you sell the same position you bought. If the option's premium has gone up since you purchased it, you may make a profit. If the premium has gone down but the option has any intrinsic and/or time value, you'll still be able to offset some of what you paid.

If you're an options writer, you can choose to close out, or offset, your position before it is exercised to relieve yourself of your obligation by buying the option you sold. Depending on the premium's value, you could end up making a profit by closing out. But, if you have to pay more than you originally sold for, you'll end up taking a loss, though it may be a smaller one than you would face should the option be exercised.

Options involve risk and are not suitable for all investors. Detailed information on our policies and the risks associated with options can be found in Scottrade's Options Application and Agreement, Brokerage Account Agreement, and Characteristics and Risks of Standardized Options (available at your local Scottrade branch office or from the Options Clearing Corporation at 1-888-OPTIONS or by visiting www.888options.com). All option accounts require prior approval by Scottrade. Market volatility, volume, and system availability may impact account access and trade execution. Supporting documentation for any claims will be supplied upon request.