3
votes
3answers
302 views

When shorting a stock, do you pay current market price or the best (lowest) available ask price?

A stock has a last sale price of 2.5 dollars on the NYSE. Say I am shorting 1000 shares of a stock, there's an ask price of 3 dollars for 500 shares. Theres an ask of 3.5 dollars for 250 shares, and ...
3
votes
1answer
82 views

What is a good service that will allow me to practice options trading with a pretend-money account?

I want to get a little more practice before I put my money on the line. I was using Paper Money from thinkorswim through school, but my account is bugged where the buying power will not update. The ...
5
votes
2answers
127 views

Am I doing the math for this covered call/long put strategy correctly? What risks do I run with this strategy?

In this trade, I write an in-the-money covered call and buy an in-the-money put (as an example) on GM, expiring in September 2014. The call premium is $10.02 with a strike of $26, and the put premium ...
5
votes
3answers
224 views

Why would someone buy a way out-of-the-money call option that's expiring soon?

I swing trade equity options every once in a while for fun. This morning I witnessed something I do not understand at all. In the attached photo, why would someone purchase 6 contracts for .05 at ...
2
votes
1answer
162 views

Does the uptick rule apply to all stocks/ETFs and other securities, or only specific ones?

Does the uptick rule on U.S. securities apply universally across all stocks, all bonds, all futures and all options? Or is it limited to certain category of securities/instruments? Is there a ...
3
votes
3answers
167 views

When writing a covered call, what's the difference between a “net debit” and a “net credit”?

My brokerage account (Fidelity) gives me two choices when writing a covered call: net debit and net credit. What's the difference between these two choices? For example, take DRRX (share price $1.4). ...
2
votes
1answer
142 views

Am I doing the math for this long straddle strategy correctly?

I'm looking at making a long straddle trade, and I'm trying to make sure I have the math correct before making the trade. Here are the details in the example I want to work out: I'm using options on ...
1
vote
2answers
139 views

What would the broker do about this naked call option?

Let's say there is a stock of ABC currently at $8, and I sell a (naked) call option on it, with a strike price of $10 and expiration in two months. Suppose my broker lets me do this if I have 50% of ...
0
votes
3answers
76 views

Are there any investment strategies which take advantage of an in-the-money option price that incorporates no “time value”?

I'm not sure if "time value" is the correct term, but if an option (still at least several months from expiry) is trading at the difference between its underlying stock's price and its strike price, ...
3
votes
2answers
115 views

Looking at Options Liquidity: what makes some stocks so attractive for options traders?

I've noticed that options volumes can vary dramatically between underlying securities. What makes some stocks (e.g. AAPL, BAC) so attractive for options traders?
6
votes
2answers
267 views

Do the proceeds from selling an option immediately convert to buying power in a margin account?

In a cash account, the proceeds from the sale of any security will be held until settlement; for options, this is effectively overnight. One can sell an option on one day, and then use the funds the ...
3
votes
2answers
317 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 ...
5
votes
1answer
2k 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 ...
3
votes
2answers
128 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?
6
votes
2answers
114 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
4answers
220 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?
5
votes
2answers
371 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
5answers
1k views

Purchasing options between the bid and ask prices, or even at the bid price or below?

For those more experienced options traders, I'm wondering if you can share what you've found in regard to purchasing near, at or possibly below the bid. For example, yesterday in a slightly rising ...
2
votes
2answers
606 views

Strategies to recover from a bad short-term call options purchase where the underlying dropped instead?

If I bought some short-term call options on an expectation that the underlying stock would go up, but instead the underlying stock declined some, shortly after my options purchase, what choices are ...
7
votes
2answers
384 views

What does this statement regarding put options mean?

I read an article in the NY Times, but I don't understand what this statement means: “The 16 puts on Cisco are offered at 71 cents. We should buy 1,000,” he says to a trader sitting across the ...
11
votes
4answers
288 views

Covered Call Writing - What affects the price of the options?

A little while ago, I bought $800 worth of stocks and sold about $200 worth in call options against the stock. I think it was 200 shares and 2 contracts (so my options weren't naked). That takes the ...
2
votes
2answers
126 views

Where to find really good articles on stocks and general trading information?

Apart from this website, are there any other websites out there that are focused on trading and investing?. I am looking for a website where I can find articles etc on trading and investment - say ...
4
votes
3answers
3k views

How do you calculate the rate of return (ROR) when buying and selling put options?

How do you calculate the rate of return (ROR) when buying and selling put options?
7
votes
5answers
2k views

Is there a good options strategy that has a fairly low risk?

Is there a good options strategy that has a fairly low risk? It doesn't matter if it's complicated, has several legs, and requires margin.
12
votes
2answers
866 views

How can put options be used to buy shares at a lower price?

How to use puts, if you are a net buyer of stocks? I read an article about Warren Buffet buying Burlington Northern stocks and how he used puts to lower the buying price of the shares. Please, ...
4
votes
2answers
102 views

What is the options industry changing about option symbols in February, 2010?

I've heard that the options industry and options exchanges are making changes to options symbols effective February, 2010. What are the specific changes to stock option symbols? Why are the changes ...