This tag is to be used for any question on call-options. i.e. a agreement or right to buy a stock or commodity at a specific price. Related tags [put-options, options, options-assignment, option-exercise] should be used when appropriate.

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Impact on long call options

Anyone know the impact on long call options when a company reorganizes and issues new equity thereby diluting the shares? Are they unchanged or do my options increase proportionately with the dilution ...
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1answer
22 views

Accounting Entry for Selling a Covered Call

I recently started looking at trading options and started with the time honored tradition of selling a covered call. What I don't understand now is what my trading platform (TD Ameritrade) balances ...
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2answers
44 views

Call option- premium fall with rise in spot price

The premium of the below call keeps falling although the price is increasing and it still has more than a month until expiry. The current spot price is 392. Shouldn't the in the money strike premium ...
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3answers
69 views

Options profit calculation and cash settlement

I have a question regardnig call options. For example: 108-strike AAPL options expiring Dec 24th are 83 cents. That means the cost of one contract would be 83 + 5 (commission) = 89 dollars ...
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61 views

Options tax treatment

Suppose I want to write a covered call on my 100 shares of AAPL that I have held for over a year. If I sell a covered call of AAPL 125 in December 2015 with a June 2016 expiration, and the premium on ...
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3answers
93 views

When can we exercice an option?

Can we only exercice an option when it expire ? For exemple I have an Adobe option with a strike price of 87.50$ and expiring on 2016-01-15. Adobe stock have already raised above my strike price. ...
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1answer
75 views

How to exercise options when you they're worth more money than you have? [duplicate]

This is a hypothetical situation, I'm not actually in this position. I'm also an amateur with this, so correct me if I make any mistakes. Let's say a stock is $100. You buy $4,000 worth of $0.50 call ...
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2answers
32 views

Is there an online tool to help purchasing option spreads? [closed]

I'm pretty new to futures trading and I'm wondering if there is an online tool to help look at various spread options contracts? I'm interested in getting some experience trading futures with pretty ...
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2answers
129 views

Total price of (AAPL option strike price + option cost) decreases with strike price. Why?

I'm looking at apple options and found this strange pricing in the options table. It seems like if you buy a lower strike price your total cost for buying the stock and options is much less. Why is ...
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4answers
210 views

Exercising an option without paying for the underlying

As a follow up to my other question, I would like to know whether the following is possible: Let's say I have $20.000 in my brokerage account Suppose there are call option with strike 300 (and ...
2
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2answers
105 views

Is there an academic framework for deciding when to sell in-the-money call options?

I've been buying 1-year at-the-money call options on various stocks as a way to increase my leverage. I almost never regret selling them once they are up 40%. There are many times when they've been ...
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1answer
222 views

What is the maximum number of options I can buy if the price is $0.01?

In options trading, the lowest price for one call option can be as low as $0.01, for example for one contract which expires in a year. My question is what is the maximum number of options I can buy ...
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1answer
104 views

How does a dividend announcement affect a option straddle position

If I buy an at the money straddle, hoping to profit from a volatility increase, then how does an underlying dividend announcement affect my PnL? I am thinking that if the underlying announces a ...
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0answers
24 views

Why is this option trade considered over the counter

In this article the author says: Since June 24, crude prices halved while CVX has dropped only 20%. SPY has risen slightly less than 3% during that time period. What’s a good options ...
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3answers
936 views

If the put is more expensive than the call, what does it mean

If an At the money Put trades for much higher than the ATM call, can we say that people are expecting the stock to move down? After all, what else could be the reason if the put is more expensive ...
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1answer
39 views

Why the call option premium sometimes does not decrease the further out of money we go

Usually when you have an option change, the further OTM you go, the premium drops for the same expiry date. But if we look at the Mar 2015 Call and Put option chains for VIXY, it seems this is not ...
2
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1answer
61 views

Option settlement for calendar spreads

Hypothetical: let's say it's Jan 17, 2015 and AAPL is at 100. My portfolio contains: Long 1 Jan 23, 2017 Call Option for AAPL at 60 Short 1 Jan 17, 2015 Call Option for AAPL at 90 20,000 USD cash ...
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2answers
136 views

How to correctly track a covered call write (sell to open) in double-entry accounting?

I recently started using gnucash for personal accounting, but I guess this question doesn't depend on the software. I sold a covered call, and I'm not sure how to keep track of that in the ...
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0answers
135 views

Choosing a strike price when you sell a short combo

Often different stocks that I want to short are not on my broker's "easy-to-borrow" list, so they are unavailable for shorting. A couple weeks ago I got serious about option trading and I found out ...
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2answers
478 views

How to sell a worthless option

I have a call option that will expire as worthless in January but I'd like to sell it now and realize the loss this year to lower this year's capital gains taxes. I would be happy to dump it at $0.00 ...
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1answer
92 views

“In-the-Money” vs “Out-of-the-Money” Call Options

This is a homework question, but can explain to me how to determine "in-the-money" vs "out-of-the-money" call options based on the table below? The image above is a newspaper style quote. The first ...
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2answers
115 views

Future price == strike price in the future contract?

Assume a future contract specifies that the holder of the contract will need to buy corn from XYZ farm at £100 per tonne, 1 tonne. So total deal value when realizing this contract is £100. We all ...
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1answer
334 views

Sell covered call on an index option

When I trade an index option (SPX), there is no actual trading going on in the underlying (as opposed to SPY). But some option strategies (like covered call) by definition require a position in the ...
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1answer
489 views

Why out of money options show no bid price but a valid ask price

Looking at the option chain for SPY I see that a lot of the out of the money calls are showing Bid as N/A. What is the reason? Nobody wants to buy out of the money calls because expiration is ...
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1answer
837 views

Why does shorting a call option have potential for unlimited loss?

Referring to http://en.wikipedia.org/wiki/Option_(finance), for a short call: If the stock price increases over the exercise price by more than the amount of the premium, the short will lose ...
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1answer
69 views

What is the probabiltiy of being assigned if the call expires in the money

If I sell a call option and at expiry, the call is in the money, is it guaranteed that I will be assigned and will need to deliver the underlying? What is the probability of assignment/ My question ...
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0answers
50 views

Options contract calculator - for non-equities

All of my options calculators are within stock trading platforms, or readily found on the internet and require stock/index symbols. I am trading illiquid options over the counter, on an asset. I have ...
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2answers
106 views

Buying & Selling Call Options

So, I understand that if I write a call option and someone decides to exercise it before it expires, I agree to sell them the stock for the listed price on the option. I guess my confusion is, if I ...
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2answers
273 views

Can a Covered Call be called away before the expiration date?

Scenario: If I hold 100 shares of XYZ, I can sell 1 XYZ call. Let's say the current price of XYZ is $50. What if I sell a call with strike price $45? Does that mean the underlying owner can call away ...
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1answer
104 views

How do I calculate the return on my stock _call_ option, similar to my _put_ example?

I'm trying to figure out the effective percentage return when I write ("sell to open") a stock call option. I think I've figured it out for put options. Consider this put example I think XYZ stock ...
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3answers
2k views

Am I understanding buying options on stock correctly

I'm just wondering if I am understanding Stock options correctly. Basically if I am watching stock XYZ. It's currently at $10 per share which I believe is low and should raise to 20 within 1 month. ...
2
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3answers
226 views

Why does a long/purchased call option have a long position in the option itself?

I am teaching myself some finance through a book. And I get confused by call/put options having short/long position in the options themselves or the underlying assets. For example, I understand the ...
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1answer
56 views

Is there an equivalent of writing calls on personal real estate holdings

Where possible I like the ability to write calls on the underlying asset for the residual income in a low-medium volatility environment Is there the equivalent of doing this with real estate? I am ...
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1answer
28 views

Can a deeper ITM call be cheaper than a less deep ITM call for same expiry date

In this option chain for SPY Apr 25 calls the one with a strike of 170.50 has a lower price than the one with a strike of 171. But why is this? 170.50 call is deeper ITM than 171, so it should be ...
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1answer
50 views

Can I get an assignment notice as soon as I sell a covered call

If I sell an American style ITM covered call, then in theory, can I get an assignment notice as soon as I have sold the call, since the counterparty can opt for early exercise? Does this ever happen ...
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1answer
128 views

What does an options premium really mean?

I am taking a derivatives class at college, and I am getting slightly confused about how to understand options premiums. I have a couple of questions, specifically on this slide presented in class: ...
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1answer
994 views

Negative Balance from Automatic Options Exercise. What to do?

I have an account with ShareBuilder and recently purchased some call options, which ended up deep ITM (in the money). I attempted to close the options too close to when the market was about to close ...
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1answer
1k views

Options: Letting it expire or sell when profiting?

Do you let your options expire or would you sell it before you let it expire if you're profiting (meaning you're in the green - market is going towards the correct direction you anticipated). If you ...
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1answer
147 views

Put-Call parity - what is the difference between the two representations?

I have seen these two terms for put-call parity: S + P = C +Ke^(-rT) S + P = C + K/(1+r)^T Which one is the correct formula? When to use each of them? What is the diffrence?
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1answer
206 views

What does this mean? SELL -10 VERTICAL $IYR 100 AUG 09 32/34 CALL @.80 LMT

can someone please explain what does this quote mean? SELL -10 VERTICAL $IYR 100 AUG 09 32/34 CALL @.80 LMT what is Vertical what is -10 what the 32/34 stands for? what is LMT
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1answer
120 views

Knockout certificate (Long) fell more than 6% even though the underlaying security rose 1.2%

I recently bought a knockout certificate for facebook. So far it has been doing great returning more then 200%. But recently it has been doing something really strange. On Friday Facebook rose 1.2% ...
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2answers
1k views

Can the purchaser of a stock call option cancel the contract?

Let's assume there's a company, XYZ, trading at $11/share today. I purchase a call option @ $15 for $0.05. Do I need to keep funds in my account to satisfy the contract? I know my counter party ...
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2answers
154 views

Can I convert spread option into regular call or put?

I have bought spread call on stock X. After that point, the stock went up and came back. My short position is the same price as it was when I bought it 1 month back. At this point If I just clear out ...
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3answers
378 views

What is the best way to make a bet that a certain stock will go up in the medium term?

If I want to make a $1000 bet that, say, a share of AAPL will be $1000 in a year's time, what's the best way to do that? AAPL is over $600 today, so with my $1000 I can only afford to buy one share. ...
4
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3answers
493 views

Options strategy - When stocks go opposite of your purchase?

I'm a bit new to options and would like to ask for someone's strategy opinion. Lets say that you buy a call at an expiration date 2 months or so from now, and in a few days you see the stock go flat ...
2
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2answers
6k views

Difference between Black-Scholes, Binomial models and Market price in European index options?

Need some help! I have calculated the theoretical price of an index option using BS and Binomial models and are now comparing the three. While BS and Binomial have approximately the same value, ...
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2answers
711 views

how do I calculate rate of return on call options that are spread

I want to do a leap spread on an existing covered call option. How do I calculate the rate of return to determine if it's worth doing the leap spread?
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2answers
7k views

Difference between European and American options

Appreciate some help with a problem i am facing OK, so first I found a put and call option with same strike price and maturity for both American-style and European-style options. I selected the ones ...
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1answer
81 views

How to buy options on a specific security?

I want to buy a few call options, in my 401(k), for a specific security. I'm aware of the risks inherent to option trading, and this will be a small part of my overall strategy. Here are my ...
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2answers
147 views

How it actually works? Selling a call on a stock I hold, but has done poor, might the market thinks may rise

I currently own a little over 500 shares of a stock which represent a hefty on-paper loss for me. I don't want to liquidate the position. I think that long term that stock may come back up as in the ...