Question

On January 11, I purchased a call option on Exxon at a premium of $14.5, exercise price of $50 and March 15, maturity. On January 21, I decide to close my position by buying a put option on Exxon at a premium of $8.5, exercise price of $50 and March 15, maturity. Is my original position closed? Comment critically.

Answer 1

Calls are independent of Puts.

Value of Call and Puts are dependent on the value of underlying asset. The value of Call Option Increases when the Value of stock increases and vice-versa. Also the value of Put increases when the value of Asset decreases and vice- versa. So, Call and Puts are opposite of each other but they need to closed separately. They Put Option can not closed a position which is taken in Call Option earlier.

NOTE: The answer to your question has been given below/above. If there is any query regarding the answer, please ask in the comment section. If you find the answer helpful, do upvote. Help us help you.