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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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
30 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
20 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
15 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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0answers
27 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
59 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
18 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 ...
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0answers
33 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
47 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
17 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
45 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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0answers
38 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
65 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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0answers
13 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
24 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
37 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
45 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
27 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
48 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 ...
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2answers
129 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
12 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
44 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
13 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 ...
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0answers
29 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, ...
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2answers
61 views

If an option's price is 100% made up of its intrinsic value, is there a way to guarantee a non-loss while having a chance at a profit?

Let's hypothetically say that a stock is trading at $153, and I can buy its $150 call option for $3. If I shorted 100 shares of the stock and bought 100 options, then I would be guaranteed to break ...
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2answers
43 views

Risk and reward of a synthetic option position

I am trying to understand option synthetics. This article mentions: For example, if your stock is at $100 per share and the you sell a 105 Call and buy a 105 Put, you have zero risk (and zero ...
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27 views

Is the education provided by OIC good

Does anyone have experience with the educational courses provided by options industry council? What is the quality of the material? Is it just another option course talking about some magic ...
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0answers
14 views

Retail bokerage sites that can help with Flex/CFlex Options?

Does anyone know if there are retail brokerage companies that can help with creating Flex/Cflex options? I am looking to create LEAPs on an ETF. I found the following link about "List of CFlex 2.0 ...
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1answer
36 views

Why at the money option has higher theta than out of money option

Why is the theta highest for the option at the money(22.50 in the screenshot), but decreases as we go further out of the money? I understand that ITM have little time value, so they will have small ...
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1answer
57 views

Why gamma scalping is not advised for retail traders with reg T margin

I am trying to understand gamma scalping Why does the author say: Only traders who are very well capitalized, very knowledgeable and experienced, and who have retail portfolio margining should ...
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1answer
68 views

Why are there no exchange traded options on 3x leveraged ETNs

Since these would help me manage risk in my personal financial portfolio, why are there no exchange traded options on 3x leveraged ETNs? Is there a prohibition that the SEC is perpetuating? Is there ...
-1
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1answer
31 views

Close an option position after getting an early assignment notice

If I sell an option, and the option goes in the money prior to expiration, and I get hit with an early assignment notice, can I still close out the option after I get early assignment notice? I was ...
2
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2answers
54 views

Options liquidity and trading positions larger than the daily volume?

I want to open and close an options contract position that would be larger than the daily volume and open interest for that particular contract and expiration date. Would my broker or other market ...
-1
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1answer
42 views

How to sell large amount of options?

If the amount of contracts to sell is about 2-3 times the average daily volume, the bid size is usually higher than the contracts to sell, the ask premium price is about 8% above the bid, how would ...
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0answers
26 views

How many naked option contracts can I write if I want to use maximum margin

Let us say I want to write a naked option on SPX in my interactive brokers margin account. If this is the only position I wish to hold in my account, and I want to use maximum margin, then what is the ...
0
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1answer
96 views

Trade stocks in USA

What are the conditions for foreign citizens (and non-residents) to trade on American exchanges? I believe it's possible, but don't know the conditions...
0
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1answer
30 views

Why Gamma shares an inverse relationship with volatility

At this TOS tutorial On page 3: Tom Preston: Gamma increases when the option is at the money, the option is close to expiration or volatility is low I am confused about 'volatility is low' ...
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0answers
41 views

Calculating greeks from given option information

I have some software that spits out information about an option. Strike, underlying information, etc, but I cannot get the greeks using this software. Given that these are American options, is there ...
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1answer
50 views

How splits and dividends affect option prices

When a stock goes through a split or offers a dividend, do the option prices automatically change? If yes, how? A 2 for 1 split will automatically halve the option price? A dividend of 1$ will ...
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1answer
41 views

Option spreads in registered accounts

Are there any option brokers for canadian people that allow you to do credit and debit spreads in their rrsp and Tfsa accounts?
2
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1answer
229 views

Does weekend count for option decay?

Does sat/sun also decay the value of options or just days the market is open?
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2answers
103 views

Trading : how to deal with crashes (small or big)

i'm currently learning how to trade both manually and with EAs. I have questions : i'd like to know how to deal in the probability of a price crash like in 1987 (and many others): Is using a right ...
-1
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1answer
55 views

Why is the terminology “put” and “call” not applicable to futures contracts?

Why is the concept of puts and calls applicable to options, but not to futures? Futures and options are similar, the key difference being that futures represent an obligation, whereas options ...
2
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1answer
39 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 ...
4
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1answer
193 views

How to record a written put option in double-entry accounting?

I have been using double-entry accounting to carefully track my financial situation for a couple of years now, but I am just dabbling with stock options for the first time. I wrote a put option (sold ...
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3answers
90 views

If a put seller closes early, what happens to the buyer?

If an investor buys a put option to protect their long position, but the seller closes the position before expiration (if it gets close to being in the money), does that eliminate the buyer's ...
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3answers
112 views

Why does financial investor bother to buy derivatives and then hedge the position?

I am recently studying mathematical finance, and I am not really familiar with how the financial system works. This might be a naive question: when reading some books on mathematical finance, ...
2
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1answer
40 views

How to bet that INR will gain in value

If I want to bet that in the next 3- 5 years, under the new government, the INR will recover most of its values against USD (a.k.a 1 USD = 50 INR), what investment/trading/betting options are ...
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0answers
29 views

Do I need to close out an in-the-money short straddle?

If I am short both a call and a put with the same strike on the same security, what happens if I let this position expire in-the-money? How much, if any, cash would I need to have liquid at ...
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1answer
36 views

Why does option with lower delta move more?

Shouldn't an option with a lower delta move less than one with a higher delta? The spy 208 jan put option has a lower delta than the 209 jan put. Why does the 208 have a larger range? low ...