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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66 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
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0answers
45 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
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0answers
29 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. ...
7
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1answer
174 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
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2answers
81 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
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1answer
31 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
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1answer
59 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
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3answers
73 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
73 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 ...
1
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2answers
77 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
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1answer
56 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
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1answer
74 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
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1answer
43 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
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0answers
26 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
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1answer
25 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
113 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
68 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
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0answers
51 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 ...
0
votes
1answer
50 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. ...
0
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1answer
26 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 ...
0
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0answers
25 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 ...
0
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0answers
41 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 ...
-1
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1answer
65 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 ...
-1
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1answer
36 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 ...
1
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0answers
63 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. ...
1
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1answer
93 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 ...
0
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1answer
23 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 ...
0
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1answer
67 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 ...
0
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0answers
53 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?
1
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1answer
148 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. ...
0
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0answers
27 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 ...
0
votes
1answer
41 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: ...
0
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0answers
47 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 ...
0
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2answers
104 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
47 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 ...
1
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2answers
76 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?
0
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0answers
19 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 ...
1
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2answers
51 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 ...
0
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0answers
31 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 ...
1
vote
0answers
40 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, ...
1
vote
2answers
66 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 ...
0
votes
2answers
53 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 ...
0
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0answers
29 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 ...
0
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0answers
16 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 ...
0
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1answer
93 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 ...
0
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1answer
112 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
84 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
35 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
votes
2answers
64 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 ...