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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3
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2answers
70 views

Hedging against an acquisition of a stock

Let's say I have done research and have a view that a public company's stock will go down due to worsening fundamentals. So normally then, one can express that view by shorting the stock. However, ...
0
votes
0answers
9 views

Bid ask spread on a mutual fund containing derivatives

On mutual funds with bid and ask prices, It is my understanding that these prices should be close to the bid and ask prices of underlying securities according to their weights in the fund, divided by ...
1
vote
1answer
62 views

Tropical Trade Stock Trading

Is Tropical Trade a valid stock trading company? I would like to start investing but I want to know the validity of the trading company.
0
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2answers
35 views

Open Interest vs Volume for Stock Options

Wanted to double check my intuition - What if there is only one trading day and the volume is smaller than the open interest on that one trading day. This is assuming there is no open interest before ...
0
votes
1answer
59 views

Anyone know if IG or Plus500 are scams or not?

I have been doing some research into online trading and came across 2 platforms that are pretty good and user friendly. http://www.IG.com and http://www.plus500.com I have read quite a lot of reviews ...
2
votes
5answers
176 views

Should a strategy backtested against three years of tick data continue to produce positive results?

Let's say we have a Binary Options 5-minute trading strategy that relies on multiple indicators and exploits price reversals in currency pairs. Now let's say there is a combination of inputs for the ...
3
votes
3answers
55 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 ...
1
vote
3answers
74 views

Unemployment Insurance Through Options

Both Kyle Bass (from about 8:00 - 9:40) and Mark Spitznagel discuss an approach to finance where an investor takes a small percentage of their wealth and bets on an unlikely outcome, expecting to lose ...
3
votes
1answer
42 views

What happens to a call option in a cash/stock acquisition?

Let's be specific. I hold April 2016 135 calls for CB (Chubb). CB is being acquired by ACE. The deal is $62.93 per share in cash and 0.6019 share of ACE stock for each share of CB. The deal is ...
0
votes
3answers
92 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. ...
1
vote
0answers
38 views

Trading intraday fluctuation vs. volatility-based option

Recently a question was asked about actively trading stocks based on small fluctuations in price. It seems like if you wanted to do the strategy described here, you might as well buy an option like a ...
0
votes
0answers
41 views

Yuan USD Option

Are there any possibilities for a retail investor to buy a USD/Yuan option other than the ones on the CYB ETF and those from Goldman Sachs? The idea is to bet on a lagre depreciation of the Yuan.
2
votes
5answers
673 views

Options vs Stocks which is more profitable

Assuming I enter a stock at $100/share. The stock goes up 3% over the course of two days, I then sell the stock and collect my profits. How would this compare to me buying a call option contract for ...
3
votes
1answer
57 views

Taxes, Puts and the Wash Rule

If an investor sells a stock at a loss and on the next day, he sells a put on the same stock, does the selling of the put trigger the wash rule? Does it matter if the put was sold out of the money? I ...
1
vote
1answer
131 views

Berkshire Hathaway and Covered Calls

An investor owns several shares (like 2 or 3) of Berkshire Hathaway Class A shares. He sells 5 call contracts on class B shares and then buys them back at a loss. For purposes of taxes, were the calls ...
0
votes
2answers
53 views

How is the time-premium on PUT options calculated

I have some PUT options in AAPL, and I thought I understood how options pricing worked on a basic level but I must be missing something. Today the AAPL stock dropped $3.38, and I expected my PUT ...
0
votes
3answers
65 views

Emulating a 'long straddle' without buying or selling Options?

If I go long and short a stock simultaneously, with a 1:50 leverage, and place a stop loss on both for when a 10% loss is reached, isn't this the exact same principle as the long straddle strategy ...
0
votes
1answer
58 views

VEF/USD trading option

Does there exist a VEF/USD (Venezuelan bolivar) spot or derivative market on any public exchange?
1
vote
5answers
105 views

Why do I get a much better price for options with a limit order than the ask price?

When I'm buying an option, I notice that if I set a limit order for in between the ask and bid - say half way, I can often get the option at that price. Why is it that way? I thought the ask price ...
3
votes
3answers
579 views

Is selling put options an advisable strategy for a retiree to generate stable income?

Suppose a retiree wants to generate stable income from selling S&P500 (or other stock index) put options. Is this an advisable strategy for a retiree?
0
votes
0answers
40 views

Where is the liquidity on European derivatives exchanges

This has bugged me for a long time, and I feel like I am missing some information. When I browse Eurex, a derivatives exchange in Europe, I don't see the kinds of liquidity I would expect. For ...
3
votes
1answer
59 views

Is it commonly possible to buy an “Option for a Mortgage at a specific Interest Rate”?

I'm newer to investing, but I've come across options contracts now and then which to my understanding allow the option to buy or sell a stock at a certain price. After a discussion with a coworker at ...
1
vote
2answers
29 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 ...
0
votes
2answers
87 views

How safe is an option contract?

I know the Options Clearing Company guarantees the fulfillment of every option contract and it never happened that a option contract defaulted in history. So what could you imagine must happen so a ...
0
votes
0answers
59 views

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 ...
2
votes
1answer
79 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?
1
vote
1answer
154 views

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

quantity * delta * index quantity * delta * (index - strike) quantity * delta * min(index - strike, 0)
0
votes
2answers
135 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 ...
1
vote
1answer
141 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 ...
1
vote
2answers
88 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
votes
1answer
80 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
votes
2answers
127 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 ...
1
vote
0answers
61 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 ...
0
votes
0answers
48 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. ...
0
votes
1answer
116 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 ...
8
votes
1answer
320 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 ...
0
votes
2answers
93 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, ...
0
votes
1answer
49 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 ...
0
votes
1answer
87 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 ...
0
votes
4answers
154 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 ...
1
vote
3answers
111 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 ...
2
votes
2answers
104 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 ...
0
votes
1answer
95 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 ...
0
votes
1answer
123 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, ...
1
vote
1answer
99 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 ...
0
votes
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 ...
1
vote
1answer
131 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 ...
1
vote
1answer
184 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 ...
0
votes
1answer
78 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, ...
0
votes
0answers
59 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 ...