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.

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Hong Kong Dollar Options

I would like to bet on a de-pegging of the Hong Kong Dollar from the USD. Even though the volatility is perfect for an options trade, it seems hard to find any for the retail investor. Is anyone aware ...
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1answer
48 views

OTM puts or ITM puts in fear of market crash

If I own some shares, but at the same time I am afraid of a market crash, should I buy OTM puts or ITM puts?
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23 views

Where does over-allotment (Greenshoe) shares come from? [closed]

I'm just wondering, if following an IPO the share price goes up and the underwriter calls the option, where do those extra 15% shares come from? Does the company have to issue more stock to cover the ...
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1answer
46 views

How can I calculate the exposure of future option? [closed]

quantity * delta * index quantity * delta * (index - strike) quantity * delta * min(index - strike, 0)
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1answer
90 views

May I Invest as a non accredited investor?

I want to join a website where they allow only accredited investors to participate in investments that they manage. I am not an accredited investor. However, in the past, I worked for the company and ...
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1answer
20 views

How is SPAN and Exposure Margin Determined on the NSE?

Recently, I have been reading up a lot on writing options as this is something I am interested in. I came across a span margin calculator which asks me to enter the contract and it automatically ...
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2answers
79 views

Do Options take Dividend into account?

Suppose I own a contract with a market lot of 100 shares in company A and company A goes ex-dividend during the validity of the contract. That means, that theoretically the price of company A will ...
3
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1answer
69 views

Do European options have to be exercised at a specific time on Expiry day?

European Options as compared to American Options can only be exercised on a certain date. As I want to start writing options, I want to know whether it can be exercised by the buyer at anytime during ...
2
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1answer
96 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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52 views

Are there any financial games that simulate and teach you option tradings? [closed]

I have been wondering if I can accelerate my understanding of option tradings, and have been looking for programs or even games that teach you how to trade options. Most of the online or offline ...
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34 views

Does the Section 1256 Rule (60/40 rule) pass through to Mutual Fund holders?

Section 1256 of the U.S. Tax Code applies, in many situations, to SPX options. If I own a mutual fund that makes use of SPX options, do the SPX gains get passed through to me on a 60/40 basis -- e.g. ...
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1answer
85 views

Stock Options for a company bought out in cash and stock

I have 3 options in August for the $195 call strike. The company was just bought out for $230 dollars which was $125 cash and the rest in stock. What is my option worth since part of it is in the ...
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1answer
199 views

Prospective employer is offering to 'buy me out' of my stock/options

Over a 4 year period I have received a mix of stock options AND restricted stock at a private company. The options are not in the money, but I am wanting to liquidate my restricted stock. I am not ...
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2answers
86 views

New to options trading and need help understanding an options spread risk graph. What am I missing?

Suppose the stock is $41 at expiry. The graph says I will lose money. I think I paid $37.20 for (net debit) at this price. I would make money, not lose. What am I missing? Thanks for all your input, ...
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1answer
37 views

Disclosure (13D, insiders) and equity swaps/options

What is the current SEC ruling on equity swaps and options? For example, 13D requires that When a person or group of persons acquires beneficial ownership of more than 5% of a voting class of a ...
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1answer
65 views

does an option provide better liquidity than outright stock purchase?

Suppose the following scenario I have an option to buy stock X for 20,000 Shares, The break-even price is reached at price 15.00 The stock is currently trading at 14.50, the paid for option price is ...
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3answers
88 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 ...
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3answers
78 views

Can I trade options purely as a leveraged product?

Following the Three Ways to Buy Options article from NASDAQ, there are supposedly three different ways to trade options after buying them: Exercise the option at maturity Exercise the option before ...
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2answers
89 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
61 views

Does implied volatility always rise as earnings announcements approach?

Often, implied volatility of options rise as an earnings announcement approaches. Does this principle hold true regardless of whether the earnings are expected to be good or bad? Also, usually IV and ...
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1answer
99 views

3% Equity options in software company, entitles me to revenue share?

We are a software company and have a partnership with another software company that gives us components to implement within our software and now they want to buy the intellectual property from us, ...
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1answer
51 views

Do equity options trade outside regular hours, similar to after hours trading for some stocks?

Is there an after hours trading market for equity options also, similar to that of the equity market? I am specifically interested to know if BB (TSX) and BBRY(NASDAQ) options trade outside regular ...
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0answers
29 views

How to decide on the proper strike and expiry month while opening a long box spread

In theory, I should be able to open up a long box by selecting two strikes where the debit required is less than the difference between the strikes, then hold the box to expiration and get back an ...
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1answer
37 views

Offsetting the tax on vested RSUs with short term capital loss

For sake of simplicity let's say I vested 100 shares from RSUs, that triggered a stock sale of 40 shares at $10/share to cover tax withholding of $400. Is it possible to offset the $1,000 gain ...
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1answer
126 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
71 views

How is a long call and short stock portfolio equivalent to lending money

In his book 'Volatility Trading' Euan Sinclair writes that a hedged portfolio of long call and short stock is equivalent to lending money. He did not provide much clarification, so I am wondering, ...
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53 views

How can I affect implied volatility of an option?

Implied Volatility represents the actual above-market premium an option contract trades for at any point in time, but it changes in mysterious ways. If I wanted implied volatility to be higher, could ...
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1answer
58 views

American trade Hong Kong financial markets (specifically index options)

How can an American get access to the Hang Seng index and index options? This trades in Hong Kong, but really exposure to Hang Seng stocks and derivatives (and index options) in general would be good. ...
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1answer
27 views

Guidelines for scaling into an options position

What are some guidelines for scaling into an options position when the position has moved in your favor, and you are looking at a paper profit of ~ 5% (arbitrary number). Do you just double up? Are ...
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0answers
26 views

How to improve risk/reward profile of a calendar spread position

In a calendar spread (short front month ATM option, long back month ATM option), you want the stock to be right at the short strike at front month expiration. Too much movement from the short strike ...
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48 views

How to consider the effect of margin call risk in a gamma scalping strategy

I am trying to tippy toe into volatility trading and volatility strategies. So I was reading Sheldon Natenberg where he starts off with a portfolio of long ATM call and short 50 shares of stock to ...
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1answer
68 views

How does a person with a large equity in a company hedge his risk

How people like Bill Gates , who has the bulk of their wealth tied up in MSFT shares, hedge their downside risk in case the share price tanks? If he were to buy put options like the rest of us, it ...
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1answer
69 views

Are there option strategies that exploit mergers and acquisitions events

Are there any option strategies that can profit from mergers,acquisitions and buyouts? I don't mean insider trading, I mean after the news is out but the deal has not taken place yet, are there any ...
2
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1answer
95 views

What happens if futures contract seller defaults?

I'm considering buying a put future to hedge against interest rate increase. I know there is a certain level of protection from default as required by the contract, but I assume the risk is not zero. ...
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1answer
95 views

valuing options

So in my finance textbook I have the following question: T-bills currently yield 5.5 percent. Stock in Nina Manufacturing is currently selling for $70/share. There is no possibility that the stock ...
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1answer
28 views

Is an ITM option bought/sold to close in addition to being assigned?

I'm a little unclear on what happens to in-the-money options on expiration. I know the option will get assigned, but does it also need to be bought/sold to close? For example, say I sell a covered ...
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1answer
76 views

How can retail stock and options traders find trades with a clear defined positive edge

A retail trader of equities and options may believe that his technical signals and fundamental analysis is superior and smarter than the other retail traders. Maybe for some it is true. For a lot of ...
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62 views

Should I use futures or options to hedge my long SPY position?

If I am long 100 shares of SPY, what are some questions that I can ask myself to decide: Whether I should hedge by selling futures, or by buying put options? What are some pros and cons of each?
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1answer
194 views

Why do deep in the money options trade below their intrinsic value?

I have an investment account where I'm currently holding about $200K in SPY shares (S&P 500 index). I'm a bit worried that we are in a bubble, so I'm looking into strategies to hedge my downside. ...
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1answer
52 views

How much does the volatility change for a 1$ move in the underlying

Is there a quick and dirty way to approximate how much the volatility of an underlying would change for a 1$ move in the underlying. The individual option Greeks measure the sensitivity of an option ...
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1answer
54 views

Estimate a future option price given greeks and a 1$ move in underlying

Let us say underlying is at 50$, and the 50 call is at 0.50. delta=0.5, gamma =0.5, theta = .02, vega = .10. I apologize if these numbers are not realistic, I am very poor at Greeks. My question is: ...
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0answers
58 views

How to hedge volatility decreases

My particular options positions are typically a long delta, and long vega. Decreases in implied volatility, or specifically the VIX, can drastically alter the profitability of my position. Is there a ...
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2answers
130 views

Why deep in the money options have very low liquidity

I understand that OTM options with low deltas are not that attractive, hence liquidity is less. But how about deep ITM options, why is the liquidity not there? Deep ITM options are a cheap way to ...
3
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0answers
53 views

Received Stock options as UK Employee, however exercised the stock as a Canadian Employee. What is my tax liability?

I work for a global company. As a UK resident, my company awarded me stock options & Restricted stock. The stocks is traded on the NYSE. I exercised the stock in Canada. I transferred to the ...
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2answers
88 views

Do I just let an options conversion/reversal trade go to expiration?

Let us say I lock in a small riskless profit using a conversion. Which means (as an example), I sell a call, buy a put and buy stock, and net a credit of .20. What do I do next? Do I just let the ...
4
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2answers
136 views

Why do options skip May/June?

I notice a lot of stocks aren't offering options for May. Many aren't offering for May and June. Is there any reason for this gap?
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0answers
23 views

Profit and loss graph of long call with many days to go before expiry

The profit and loss graph for a long call is the well known hockey stick. I understand the reason for this shape at expiry. But what is the reason that as more days are there to expiry, the curve ...
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2answers
55 views

Does an understanding of synthetic options give any edge to the retail trader

What are some practical applications of synthetic option positions for a retail trader? One can always memorize synthetic relationships. But how does understanding a synthetic relationship help the ...
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0answers
45 views

Can an individual investor easily trade options for NASDAQ-CM equities?

When I look at a NASDAQ-CM-listed company on my broker's site (or on Yahoo/Google Finance pages), there are no option prices listed. Is there some way for an individual investor to buy/sell ...
2
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1answer
65 views

a “fully” American option strategy?

Is there such a thing as an American butterfly spread? For a European butterfly spread simply buying 1 put with strike price X+a, 1 put with strike price X-a and shorting 2 calls with strike price X, ...