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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8
votes
1answer
1k views

How are proceeds from writing covered calls taxed?

When I sell call options based on an underlying security that I own (covered call writing), how are the proceeds treated fro tax purposes? As ordinary income? As a short-term capital gain? Is ...
3
votes
1answer
84 views

How do straddles that involve selling options protect against early assignment?

When doing a covered straddle in options trading, it involves selling put and call options when entering the straddle. But there is no way of guaranteeing that your options won't be assigned before ...
5
votes
2answers
245 views

Can a put option and call option be exercised for the same stock with different strike prices?

Refer to http://finance.yahoo.com/q/os?s=PEI&m=2011-10-21 If I were to sell a call @ 15 and sell a put @ 13, come October 21, is it possible for BOTH of the options sold to be exercised?
3
votes
4answers
6k views

Does the Black-Scholes Model apply to American Style options?

After reading the Wikipedia article on the Black-Scholes model, it looks to me like it only applies to European options based on this quote: The Black–Scholes model (pronounced /ˌblæk ˈʃoʊlz/1) is ...
4
votes
2answers
87 views

How can I find stocks with highly priced option premiums?

I'm trying to learn some basic arbitrage and I'm reading about tons of different strategies, but it looks as though option premiums are often less than $0.10.
2
votes
3answers
201 views

Can someone explain the Option Chain of AMD for me?

http://www.google.com/finance/option_chain?q=NYSE:AMD Specifically, the $10 strike. What does the $1.99 put mean?
5
votes
3answers
517 views

What do these options trading terms mean?

I'm trying to learn about options and when I log into my bank's online trading site I see the following selections in the menu. Can anyone explain what each of them mean and how they're different ...
11
votes
5answers
9k views

Please explain the relationship between dividend amount, stock price, and option value?

I consider myself a reasonably knowledgeable investor, but today was blown away by the fact that I didn't know that a stock's price is decreased by the amount of its dividend. To use a concrete ...
4
votes
2answers
217 views

Do investors go long option contracts when they cannot cover the exercise of the options?

Consider I want to buy some american-style call options for a particular stock, and suppose this underlying stock 'XYZ' is valued at $100 a share. Suppose I go long (buy) 10 option contracts for XYZ ...
3
votes
1answer
188 views

Funneling money from a Traditional IRA to a Roth IRA using Options: Is my method possible and tax legal?

I'm new IRAs and I have both a traditional and Roth. My plan is to buy stocks in the IRA and buy protective puts in the Roth that guaranty a maximum risk of 5% or less across both accounts. I expect ...
4
votes
3answers
387 views

Covered calls: How to handle this trade?

I bought XNPT (Xenoport) a couple of weeks ago at 6.93 I turned right around and sold the Apr 16 call. $8.00 strike and collected 1.50 in premium. Today I get a great surprise that XNPT has rocketed ...
0
votes
2answers
120 views

List of FLEX options?

PHLX advertise something called FLEX options: http://www.nasdaqtrader.com/Micro.aspx?id=phlxflexproductspecs How I read this: if someone w/ a lot of money wants to write their own options chain, ...
7
votes
2answers
400 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 ...
2
votes
2answers
120 views

Are weekly CAD/USD options untradeable?

As below, cmegroup.com seems to indicate that CADUSD weekly options (expiring 25 Mar 2011) have absolutely no volume or pricing. Does this mean they're impossible to trade? Or, if I had a broker, ...
3
votes
2answers
387 views

Interactive Brokers: IOPTS and list of structured products

As below, Interactive Brokers lets me trade "IOPTS". What are these? They also let me trade "Structured Products". I know what these are, and even know what an ISIN is ...
3
votes
3answers
135 views

What are your experiences with 'self directed' 401ks?

Some background: have no plans to leave current company anytime soon, so (short of borrowing against my 401k balance to invest outside the 401k) I can't get the funds out want to max out my 401k ...
12
votes
2answers
3k views

What are the tax implications of exercising options early?

Say you have the following situation: You have pre-IPO stock options Half of the options have vested, the other half will vest over the next 2 years Your strike price is S The fair market value of ...
0
votes
1answer
171 views

Can the bid price for selling the same call option in calendar spread be different from that in covered call?

I am trying to sell C (citi) call options expiring 2013 Jan at $5.00 in 2 different modes. Calendar spread mode: Bid Price is $0.24 Covered call mode: Bid Price is $1.01 1)Why is there a difference ...
11
votes
4answers
304 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 ...
8
votes
2answers
2k views

What are the odds of being assigned for a long dated in-the-money call option?

If I sell a 2-year future dated call option that is slightly in the money (For example if Citi today is $5.13, I sell a call option for strike price $5.00 at Jan 2013 - today is Jan 2011), what are ...
5
votes
2answers
629 views

When does selling (writing) options count for tax purposes?

Let's say I sell an option (say a naked put) that expires in January. If I wait until January to let it expire, does that mean the profits will count towards next year's taxes? Or since I actually ...
5
votes
5answers
7k views

Why are American-style options worth more than European-style options?

Why are American-style options worth more than European-style options? I realize I can exercise American-style options anytime before the expire, but I can only exercise European-style options ...
5
votes
1answer
956 views

Can the Delta be used to calculate the option premium given a certain target?

I’m struggling for a while now with a question about options, namely 'which is the best option to buy?'. I have various books on options, but I’m not an mathematician and don’t have (yet) any ...
6
votes
5answers
2k views

Where can I trade FX spot options, other than saxobank.com?

An FX spot option is a call/put on a FOREX currency pair that has a user-set strike price and expiration date. It's traded over-the-counter and is not a standardized exchange-traded option. If you ...
4
votes
2answers
866 views

Brokerage Fees for Covered Call Options

I have been doing some research and am thinking of selling a Covered Call on a stock I currently own and am planning on holding long term. I would like to make an Out-of-the-Money Covered Call (OTM ...
3
votes
1answer
401 views

Calculating fair value of an oanda.com box option

How do I calculate the theoretical "fair value" of an oanda.com box option? More specifically, how do I calculate the probability that a given FOREX parity will enter a given range in a given period ...
7
votes
3answers
560 views

Any advantage to exercising ISO's in company that is not yet public?

I have ISO's in a private company and am trying to decide whether there is any advantage in exercising them. The price is low enough and my confidence in the company is high enough that I am ...
14
votes
4answers
464 views

Options revisited: Gold fever

In my recent question, I asked how to operate with options. Now I would like to see whether I learned anything. At this moment, Gold is rising. Fast. As I see it, in the future, the gold price has to ...
29
votes
10answers
19k views

Options for dummies. Can you explain how puts & calls work, simply?

I never understood Puts or Calls. Could anybody explain it like I were a child?
6
votes
2answers
2k views

Why won't my retirement account let me write a “covered put”?

My retirement account (a traditional IRA) will let me write a covered call, where I sell a call option if I have the underlying securities (for instance, 100 shares of IBM). The shares are required to ...
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 ...
5
votes
3answers
264 views

Fund or ETF that simulates the investment goals of an options “straddle” strategy?

With all the market volatility of late, I was thinking that it might be a good short term strategy to employ a straddle approach. For those not familiar with Options trading: This is a strategy ...
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?
2
votes
1answer
1k views

Where to find LEAPS option quotes (full chain)? CBOE & Yahoo! Finance not working

It appears that most sites that give stock option quotes are broken. I'm trying to get a full chain for 3M (MMM) in Jan 2012. I tried CBOE and Yahoo!. CBOE doesn't even show the LEAPS. Yahoo! ...
3
votes
2answers
235 views

Rules for Broker Behavior with Covered Calls

When selling covered calls, there are a couple of things a broker could do if the stock has a sharp increase. Here's an example: Buy Stock: $100 Sell Call $120@1month: $1 Two days later, the stock ...
8
votes
3answers
21k views

What typically happens to unvested stock during an acquisition?

I work for a publicly traded company that was acquired by another publicly traded company. I also own shares of "restricted stock units" for my company. All of my shares are scheduled to vest far ...
5
votes
2answers
399 views

Where can I get a list of ticker symbols that have stock options?

I would like to examine the option chains of almost every stock that has options. Is there some sort of stock screener or application that can give me a list of the ticker symbols that have 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.
6
votes
1answer
199 views

When an in-the-money stock option expires does the broker always execute it or does its value become worthless if the owner doesn't execute it?

When an in-the-money stock option expires does the broker always execute it or does its value become worthless if the owner doesn't execute it?
12
votes
2answers
903 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, ...
9
votes
2answers
2k views

What is a stock warrant? How do warrants work?

What is a stock warrant? How do warrants work? I've been told they are similar to options; how? Then why not just call them options - what makes them different?
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 ...
6
votes
2answers
228 views

What are futures and how are they different from options?

As a form of investment there are contracts to buy commodities at a specific time in the future or at a specific price. How is this different from an option to buy a share?