This tag is to be used for any question on Options, A more specific tag [put-options, call-options, options-assignment, option-exercise] should be used when appropriate.
0
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2answers
64 views
What is a good price to “Roll” a Covered Call?
For an already initiated Covered Call, I wanted to ask if there is an optimal price to roll?
For instance, if I buy/write a stock worth $10 with a strike price of $12, I can be faced with 3 scenarios ...
0
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2answers
76 views
Black & Scholes article : option pricing
I am currently reading the famous article by Fischer Black and Myron Scholes called 'The pricing of Options and Corporate liabilities'.
Just at the beginning of the article, they go on and explain ...
-2
votes
2answers
83 views
Why are call options necessary?
My question is actually less ambitious and more specific then the title may have lead you to believe.
Suppose the interest rate is $25\%$ you have a stock at time zero price of $S_0=50$ and at time 1 ...
4
votes
4answers
134 views
How do I buy an option that doesn't exist yet?
For example, the latest option date on a particular stock is Jan 2014, but I want to buy an April 2014 option. According to Google Finance, none exists.
Is there any way I can place any order for ...
4
votes
3answers
59 views
How does the process of “assignment” work for in-the-money Options?
Consider the following scenario -
I have a covered call for XYZ for this month's expiration as XYZ May 18 25 Call. On May 18, XYZ is trading for $28, with the option listed above at $3.3.
If I ...
5
votes
2answers
127 views
Why trade futures if you have options
At this link:http://www.investopedia.com/ask/answers/09/options-vs-futures.asp they explain the difference between futures and options.
It seems futures is an obligation while options is an 'right ...
1
vote
2answers
63 views
Why do some symbols not have an Options chain for specific expiration dates?
In an attempt to generate income from holdings, I generally screen stocks that trade options regularly. In my research, I have noticed that certain stocks have weekly options - but not always. For ...
3
votes
2answers
90 views
What risk of a diversified portfolio can be specifically offset by options?
I have been reading articles on portfolios and options. It seems options are used to hedge portfolios for multiple risk factors.
I would like to know why options, and why not futures?
What is the ...
1
vote
1answer
517 views
How to calculate the standard deviation of stock returns?
I'm trying to learn the the Black–Scholes option pricing formula and one of the elements of that formula (according to http://bradley.bradley.edu/~arr/bsm/pg04.html) is the "standard deviation of ...
2
votes
2answers
50 views
Execute or trade an options contract?
Take this call for example:
FIO Jan13 22 Call
Let's say this Thursday the stock goes to $23. Here is my math:
Cost of option: $35
Cost of stock bought at $22: 100x$22 = $2,200
Thursday price of ...
1
vote
3answers
101 views
Specifically when do options expire?
Take these calls for example:
Call Time of expiration
SBUX Jan13 55 Call 2012-01-18 4PM EST
FIO Jan13 22 Call 2012-01-18 4PM EST
FB JanWk4 32 Call ...
1
vote
1answer
91 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% ...
3
votes
2answers
132 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 ...
1
vote
0answers
34 views
What rules govern when a new option series is issued?
As I'm typing this, the CBOE quotes and data page lists GOOG and FB options with expirations of September, October, November and December of 2012. But AMZN and GS only get September and October of ...
3
votes
3answers
204 views
Fraudulent Options, and Losing Money
In Batman The Dark Knight Rises, Bruce Wayne's account gets drained by fraudulent option buys that expire quickly. Is it possible for fraudulent options to be reversed?
1
vote
2answers
66 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 ...
5
votes
1answer
913 views
What does it mean to long convexity of options?
In this Bloomberg video, Curnett talks about volatility and the convexity of options. Specifically, he says;
"The spread between the VIX sitting there at 20 for a period of time and this realized ...
2
votes
2answers
109 views
What is a straddle?
I have heard the term straddle when referring to options many times. What would it mean if I wanted to enter into a straddle position?
1
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1answer
52 views
What is a long option?
I've heard of this term before but wasn't really sure of what it is, can someone provide me with some information and possibly a reference to that info?
0
votes
2answers
52 views
Why is a “long put” called long if you have a higher net position if the price decreases?
From Wikipedia:
to be long in a security, means the holder of the position owns the security and will profit if the price of the security goes up
The Payoff/Profit diagram shows that you earn ...
4
votes
3answers
186 views
Margin when entered into a derivative contract
From Wikipedia
In finance, a margin is collateral that the holder of a financial
instrument has to deposit to cover some or all of the credit risk of
their counterparty (most often their ...
1
vote
1answer
327 views
Can you explain this options calls & puts quote table to me?
I was doing some research on options and I found the attached screen. I have no idea what it means. Can someone please explain the columns of the table and how to use such a table when looking up ...
2
votes
2answers
178 views
How can I estimate the value of private stock behind employee stock options?
I'm considering an offer with generous options. I have pretty high risk tolerance, so I'm just trying to estimate the expected value of the options.
To the extent possible, I want to base this on the ...
1
vote
1answer
92 views
How do you price an option?
Are there any good websites or does anyone know how to price a stock option. Is Black Scholes the only way to price an option or are there other ways as well?
4
votes
1answer
87 views
How can I track the value of options live in my portfolio
With stocks I can enter price and amount into most applications and they allow me track the total Profit / Loss live.
Are there any ways to do this with option positions?
I was considering entering ...
3
votes
1answer
333 views
If my put option reaches expiration on etrade and I don't log in to the site will it automatically exercise if it's in the money or be a total loss?
I ask because suppose you don't manually exercise and expiration day hits and it's in the money..do you lose it all or is the in the money gain automatically credited to your account?
3
votes
1answer
145 views
Can you write a put option without sufficient funds to meet the potential obligation?
When writing a put option does your account have to be funded so that if the buyer exercises the right to sell you can meet your obligation, or can you write the put option without the funds to meet ...
1
vote
1answer
252 views
Deriving the put-call parity
I am looking at the proof of the put-call parity, $P+S=C+Ee^{-rT}$
The proof begins by defining two portfolios with same strike price $E$ and time to expiry $T$:
1. A call $C(E,T)$ plus cash ...
3
votes
3answers
189 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. ...
6
votes
2answers
105 views
When I google a ticker like XLE or something, I see a price which updates frequently (about every second or so), where can I find this for options?
Is there an options ticker I can google to get this equivalent? Or any free place where I can see the quotes updating more regularly? I know the bats order book sh
4
votes
1answer
154 views
How companies choose earnings release dates, & effect on Implied Volatility
A company's earnings release date significantly affects weekly or monthly option prices and implied volatility. For companies that typically release earnings on the cusp of monthly options expiration ...
2
votes
2answers
143 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
votes
2answers
1k 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, ...
3
votes
1answer
69 views
How is Butterfly Trade Strategy good if the mid Strike price is already past?
In the trade example below - you have two buy put and two sell puts. One buy put is on 490 and the other is at 430, but also I am selling two puts at 460.
Since the price range of AAPL already is on ...
2
votes
1answer
90 views
Can you help identify/name this equity options strategy?
I am thinking of making such a trade:
BUY PUT $590 MARCH
WRITE PUT $600 APRIL
I have done some reading and it looks like a diagonal put spread, but the diagonal put spread uses an ...
2
votes
2answers
1k 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 ...
3
votes
3answers
135 views
What option-related strategies are better suited to increasing return potential?
At this time I buy and hold stocks. In the few coming months I am considering a change in my investment strategy. If I reduce my diversification that will increase my risk. My financial coach ...
4
votes
4answers
177 views
If you want to trade an equity that reflects changes in VIX, what is a good proxy for it?
If you want to trade an equity that reflects changes in VIX, what is a good proxy for it?
3
votes
1answer
205 views
What are Binary Options?
What are binary options, what can they be traded on and what is the process in trading them?
Also, are there any brokers in Australia who offer binary options?
1
vote
2answers
241 views
techniques to roll deep in the money call options
I've got a situation(s) where I need to roll deeper in the money call options further out in time. It's tempting to want to sell at a given point, perhaps on a limit order, and then buy later, ...
2
votes
1answer
188 views
Can heavy demand for options drive up or down a stock price?
I understand the market maker is the one quite frequently on the other side of my buy or sell option order (to make sure their is liquidity in the market, and offering the bid / ask spread as ...
1
vote
1answer
177 views
What are my risks of early assignment?
I have started writing covered puts and calls recently. Everything I read talks about the risk of early assignment of your position, but I don't really understand how often this happens. It seems that ...
2
votes
3answers
172 views
Recommendation on Options Back Testing tool please
Can you recommend a brokerage or stand-alone (paid or free) options back testing tool. I want to be able to easily test a strategy against historical option prices. Probably for most strategies I ...
4
votes
2answers
257 views
How is money actually made from the buying or selling of options?
I understand that when you purchase an option it is a contract that allows you buy or sell a security at a specified price on or by a certain time.
If you purchase a call option you have the right to ...
2
votes
2answers
182 views
When you buy an option contract, how often is the market maker providing the contract (vs. another investor)?
My limited/perhaps incorrect understanding is market makers keep liquidity in options by increasing spreads in options that are less in demand, because they have to provide/make a market for them. ...
1
vote
2answers
390 views
Is there a website with options chain charts?
I would like to see a chart in the change of the bid price of an options chain. For example I'd like to see a daily chart of the bid price of ZNGA at a strike price of $10.
Is there a free website ...
1
vote
1answer
330 views
Are there downsides to switching from Scottrade to OptionsFirst?
Are there downsides from switching from Scottrade to OptionsFirst?
I want to buy stocks, write calls, and write puts.
Scottrade lets me buy stocks, write calls, but not write puts. I talked to my ...
2
votes
2answers
87 views
How can I figure out when I'll be able to write call options of a stock?
I have a 200 Zynga shares. I'm wondering when I'll be able to write call options?
I see Groupon has options on it, but Pandora does not, so it seems it must not be just time.
4
votes
1answer
279 views
Option Theta: What conditions are needed for Theta > P/N, where P = option price, and N = days to expiration?
The wikipedia definition for Theta is:
And people frequently refer to the picture below, to show what typically happens with an option's value as a function of time; we can note this is ...
2
votes
1answer
73 views
Good instruments to use for options on S&P500 and DJIA indexes?
What are some good (largest popular) instruments/ETFs to use when buying options on the S&P500 and DJIA?
By good I mean have very good liquidity, even when buying/selling further from the money, ...
