Contents
Key Takeaways🔑
| →IQ Option offers binary and digital options, which can be profitable if used skillfully. |
| →Selling options before expiration can help lock in profits or limit losses in certain situations. |
| →Always have a well-defined trading plan and strategy before entering the market. |
Options available on the IQ Option platform
The most popular financial instrument on IQ Option is binary and digital options. One could even say that these are the flagship products of this broker. Used skilfully they can be a good source of profits. In options, it is important to accurately predict the future price direction. When opening a position in options, you decide on the assumed direction, the size of the position and the expiry time, i.e. the moment at which your option is exercised.
How to sell options before the expiration time
You can sell an option ahead of schedule without waiting for its expiration. Thus you will lock in your profit or limit losses in the case that there is a high risk that the price will move in the opposite direction.
To sell an option ahead of expiration. Press the sell button located in the top-right corner of your chart. Notice in the EURUSD chart above that the option is currently profitable and there are still 17 seconds to expiry. The expected profit is 86 cents, which is the full price of this option because you can see at this moment that the prediction was right. By selling the option at this moment we will secure 23 cents, which is a small part of the potential profit. It is not always profitable to sell an option before expiry. Remember that it is mainly a tool to minimise losses and it is used in exceptional situations.
Selling multiple options before expiration on IQ Option
To sell all options of the same asset click Sell All button. If you want to sell certain options, click the information button next to Sell All and select the options you would like to sell before the expiry.
The information about your investment amounts, expected profit and profit after the sale will be available in the same window. Please note that the sell button is not always active for binary options you can sell an option when there is more than 15 seconds left before expiration for short term options.
And more than two minutes for long term options. If the expiration is scheduled for the end of the day week or month, the sell button is available when there is less than 45 minutes.
Pros and Cons of Selling Options Before Expiration 📈📉
Pros 😃
- Limit potential losses when the market moves against your position
- Lock in profits in volatile market conditions
- Correct mistakes made while opening a position
Cons 😔
- Potential to miss out on higher profits if the market moves in your favor after selling
- Not always available for all option types or expiration times
- May lead to over-management of trades, causing unnecessary losses
| Common Reasons to Sell Options Early | When Not to Sell Options Early |
|---|---|
| Correcting a mistake made while opening a position | If the trade is still in line with your strategy and analysis |
| Limiting losses when the market moves against your position | If the market is only experiencing temporary fluctuations |
| Locking in profits during volatile market conditions | If there is a high probability of further profits based on your analysis |
When selling options before expiration is a good idea
I have already written that selling options before expiration should only be done in exceptional situations. What situations might these be? I myself use this tool mainly when I open a position by mistake. It happens that an option position is opened with the wrong rate or expiry time. Instead of counting on luck and waiting for what will happen, you can quickly sell the option. In such a case it is often possible to come out at zero, i.e. the position that was opened by mistake did not happen.
Sometimes, however, it will happen that I open a position according to the strategy and my trading plan. But the market goes the other way. When I see that the rationale for opening a position is no longer valid, and the market shows signs of moving in the opposite direction, I can look for opportunities to reduce the loss. Often the loss can be reduced by selling the option before expiry.
Today you have learned another tool that allows you to develop a market advantage over other traders. By selling an option before expiry you are able to minimise your losses in certain situations or correct a mistake you made in trading. Log in to the IQ Option platform now and try out the new functionality. Consider in which situations selling options before expiration would be a good solution for your trading plan.
Enjoy your trading.
Q&A: Selling Options Before Expiration 💡
- Q: Is it always a good idea to sell options before expiration?
A: No, it depends on the situation and the reasons for selling. It can be a useful tool in certain cases, such as limiting losses or correcting mistakes, but it's not always the best option. - Q: When should I consider selling options early?
A: You may consider selling early if you made a mistake while opening a position, if the market moves against your position and your analysis is no longer valid, or if you want to lock in profits during volatile market conditions. - Q: Are there any drawbacks to selling options early?
A: Yes, selling early can cause you to miss out on higher profits if the market moves in your favor after you've sold the option. Additionally, selling early is not always available for all option types or expiration times. - Q: How can I sell an option before expiration on IQ Option?
A: To sell an option before expiration, press the “Sell” button located in the top-right corner of your chart. Note that the “Sell” button may not always be active for certain binary options. - Q: How can I improve my trading strategy to minimize the need to sell options early?
A: Always perform thorough research and analysis before entering the market, and have a well-defined trading plan in place. Consider using stop-loss orders to manage risk and take profits at predetermined levels.