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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118 views

Can I convert spread option into regular call or put?

I have bought spread call on stock X. After that point, the stock went up and came back. My short position is the same price as it was when I bought it 1 month back. At this point If I just clear out ...
5
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1answer
3k 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
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2answers
131 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?
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2answers
94 views

What is a long option?

I've heard of this term before but wasn't really sure of what it is, can someone provide me with some information and possibly a reference to that info?
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2answers
125 views

Why is a “long put” called long if you have a higher net position if the price decreases?

From Wikipedia: to be long in a security, means the holder of the position owns the security and will profit if the price of the security goes up The Payoff/Profit diagram shows that you earn ...
4
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3answers
233 views

Margin when entered into a derivative contract

From Wikipedia In finance, a margin is collateral that the holder of a financial instrument has to deposit to cover some or all of the credit risk of their counterparty (most often their ...
1
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1answer
543 views

Can you explain this options calls & puts quote table to me?

I was doing some research on options and I found the attached screen. I have no idea what it means. Can someone please explain the columns of the table and how to use such a table when looking up ...
5
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2answers
506 views

How can I estimate the value of private stock behind employee stock options?

I'm considering an offer with generous options. I have pretty high risk tolerance, so I'm just trying to estimate the expected value of the options. To the extent possible, I want to base this on the ...
4
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1answer
143 views

How can I track the value of options live in my portfolio

With stocks I can enter price and amount into most applications and they allow me track the total Profit / Loss live. Are there any ways to do this with option positions? I was considering entering ...
4
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2answers
2k views

If my put option reaches expiration on etrade and I don't log in to the site will it automatically exercise if it's in the money or be a total loss?

I ask because suppose you don't manually exercise and expiration day hits and it's in the money..do you lose it all or is the in the money gain automatically credited to your account?
3
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2answers
213 views

Can you write a put option without sufficient funds to meet the potential obligation?

When writing a put option does your account have to be funded so that if the buyer exercises the right to sell you can meet your obligation, or can you write the put option without the funds to meet ...
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1answer
409 views

Deriving the put-call parity

I am looking at the proof of the put-call parity, $P+S=C+Ee^{-rT}$ The proof begins by defining two portfolios with same strike price $E$ and time to expiry $T$: 1. A call $C(E,T)$ plus cash ...
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3answers
289 views

What is the best way to make a bet that a certain stock will go up in the medium term?

If I want to make a $1000 bet that, say, a share of AAPL will be $1000 in a year's time, what's the best way to do that? AAPL is over $600 today, so with my $1000 I can only afford to buy one share. ...
6
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2answers
120 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
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1answer
267 views

How companies choose earnings release dates, & effect on Implied Volatility

A company's earnings release date significantly affects weekly or monthly option prices and implied volatility. For companies that typically release earnings on the cusp of monthly options expiration ...
3
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3answers
324 views

Options strategy - When stocks go opposite of your purchase?

I'm a bit new to options and would like to ask for someone's strategy opinion. Lets say that you buy a call at an expiration date 2 months or so from now, and in a few days you see the stock go flat ...
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2answers
4k views

Difference between Black-Scholes, Binomial models and Market price in European index options?

Need some help! I have calculated the theoretical price of an index option using BS and Binomial models and are now comparing the three. While BS and Binomial have approximately the same value, ...
3
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1answer
99 views

How is Butterfly Trade Strategy good if the mid Strike price is already past?

In the trade example below - you have two buy put and two sell puts. One buy put is on 490 and the other is at 430, but also I am selling two puts at 460. Since the price range of AAPL already is on ...
2
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1answer
95 views

Can you help identify/name this equity options strategy?

I am thinking of making such a trade: BUY PUT $590 MARCH WRITE PUT $600 APRIL I have done some reading and it looks like a diagonal put spread, but the diagonal put spread uses an ...
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2answers
5k views

Difference between European and American options

Appreciate some help with a problem i am facing OK, so first I found a put and call option with same strike price and maturity for both American-style and European-style options. I selected the ones ...
3
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3answers
192 views

What option-related strategies are better suited to increasing return potential?

At this time I buy and hold stocks. In the few coming months I am considering a change in my investment strategy. If I reduce my diversification that will increase my risk. My financial coach ...
4
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4answers
243 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?
3
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1answer
255 views

What are Binary Options?

What are binary options, what can they be traded on and what is the process in trading them? Also, are there any brokers in Australia who offer binary options?
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2answers
623 views

techniques to roll deep in the money call options

I've got a situation(s) where I need to roll deeper in the money call options further out in time. It's tempting to want to sell at a given point, perhaps on a limit order, and then buy later, ...
2
votes
1answer
499 views

Can heavy demand for options drive up or down a stock price?

I understand the market maker is the one quite frequently on the other side of my buy or sell option order (to make sure their is liquidity in the market, and offering the bid / ask spread as ...
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1answer
379 views

What are my risks of early assignment?

I have started writing covered puts and calls recently. Everything I read talks about the risk of early assignment of your position, but I don't really understand how often this happens. It seems that ...
2
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3answers
525 views

Recommendation on Options Back Testing tool please

Can you recommend a brokerage or stand-alone (paid or free) options back testing tool. I want to be able to easily test a strategy against historical option prices. Probably for most strategies I ...
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2answers
453 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
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2answers
376 views

When you buy an option contract, how often is the market maker providing the contract (vs. another investor)?

My limited/perhaps incorrect understanding is market makers keep liquidity in options by increasing spreads in options that are less in demand, because they have to provide/make a market for them. ...
3
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2answers
4k views

Is there a website with options chain charts?

I would like to see a chart in the change of the bid price of an options chain. For example I'd like to see a daily chart of the bid price of ZNGA at a strike price of $10. Is there a free website ...
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1answer
1k views

Are there downsides to switching from Scottrade to OptionsFirst?

Are there downsides from switching from Scottrade to OptionsFirst? I want to buy stocks, write calls, and write puts. Scottrade lets me buy stocks, write calls, but not write puts. I talked to my ...
2
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2answers
100 views

How can I figure out when I'll be able to write call options of a stock?

I have a 200 Zynga shares. I'm wondering when I'll be able to write call options? I see Groupon has options on it, but Pandora does not, so it seems it must not be just time.
4
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1answer
682 views

Option Theta: What conditions are needed for Theta > P/N, where P = option price, and N = days to expiration?

The wikipedia definition for Theta is: And people frequently refer to the picture below, to show what typically happens with an option's value as a function of time; we can note this is ...
2
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1answer
95 views

Good instruments to use for options on S&P500 and DJIA indexes?

What are some good (largest popular) instruments/ETFs to use when buying options on the S&P500 and DJIA? By good I mean have very good liquidity, even when buying/selling further from the money, ...
3
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1answer
94 views

Picking a hedge option

In picking a hedge option, how important is it to buy one where the implied volatility isn't much higher than actual market volatility? Should one look at the option chain and find those options ...
0
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1answer
575 views

How to see an option chain's implied volatility skew

Are there any inexpensive tools, web-sites or services you know of where one can see: a) current implied volatility skew for an option chain b) historic implied volatility skew Thanks
2
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1answer
113 views

Notation on a put spread?

I'm reading a document that states the following: 1 year, European, 1250/1000 put spread Does this mean it's a bull or bear put spread?
5
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3answers
2k views

Do futures have premium in the price, just as options do?

Looking at Wikipedia's the pricing of futures, I wonder if entering into a futures contract requires one to pay premium just as entering into an option contract? In other words, is the premium of a ...
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4answers
204 views

Covered call when stock position is at a loss

when writing covered calls and the stock value decreases. Sure your calls decrease to $0 and expire worthless (the desired scenario) but your stock position can continue taking a greater loss. so ...
2
votes
1answer
892 views

Can a loss on the sale of my house offset capital gains tax from stock options?

I've lost a bunch of value on my primary residence. I've got a bunch of vested stock options that, when exercised/sold, will be a substantial capital gains. If I sold my house the same year I ...
2
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3answers
1k views

Search index futures in Yahoo Finance or Google Finance

I was wondering if index futures and options information are available in Yahoo/Google Finance. Say futures/options for Dow Jones Industrial Average.
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1answer
75 views

How to buy options on a specific security?

I want to buy a few call options, in my 401(k), for a specific security. I'm aware of the risks inherent to option trading, and this will be a small part of my overall strategy. Here are my ...
6
votes
3answers
260 views

Buying an option in the money, at the money, or out of the money

How would one make trade-offs between buying a call option a few dollars ITM (in the money), ATM (at the money), or OTM. I mean I understand the plain dollar differences / calculations on the ...
9
votes
2answers
264 views

Are Shiller real-estate futures and options catching on with investors?

Robert Shiller introduced an approach for reducing exposure to macro risks using real-estate derivatives. He created a successful housing price index with help from Karl Case, the S&P Case-Shiller ...
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5answers
442 views

Option on an option possible? (Have a LEAP, put to me?)

Let's say I am bullish on company XYZ at the current price. I feel like they will go up long term, and are priced well. I can sell a PUT on XYZ at a lower price than it is currently trading (i.e. ...
2
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5answers
2k 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
811 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 ...
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3answers
148 views

Are underlying assets supposed to be sold/bought immediately after being bought/sold in call/put option?

Suppose I am an investor and now buy a call option. At the maturity date, if the strike price is lower than the market price of the asset, I decide to buy the underlying at the strike price because I ...
4
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2answers
124 views

How it actually works? Selling a call on a stock I hold, but has done poor, might the market thinks may rise

I currently own a little over 500 shares of a stock which represent a hefty on-paper loss for me. I don't want to liquidate the position. I think that long term that stock may come back up as in the ...
3
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2answers
680 views

how does one see the CBOE VIX index on Google Finance?

How does one see the CBOE VIX index on Google Finance? What is a symbol I can use?