Questions tagged [options]

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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12 votes
8 answers
30k 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: I have $20,000 in my brokerage account The price of a call option with $300 strike price is $5.00 (1 ...
1 vote
2 answers
633 views

Understanding the visual representation of a Calendar Spread

The following plot and its context were taken from Hull`s Options, Futures and Other Derivative Securities (2002). I am slowly getting the basics of financial mathematics and came across this plot ...
2 votes
1 answer
92 views

Why there are duplicated option chains in futures?

As in the screenshot, there are two and three similar option for the same contract with same expiry date. What is the reason ?
1 vote
2 answers
104 views

Is It easy to buy back a put-option on its expiry date?

Say I sold a BABA put expiring 5/24 . The usual advise is to close at 50% profit. What If I leave my position open until the expiry date. The put option will be expiring with no value for the other ...
4 votes
2 answers
412 views

Can I execute an option on an ETF which I can't trade due to the EU PRIIPs KID regulation?

As an EU resident, I can't trade in ETFs which do not have a publicly-available PRIIPs KID document, e.g. SPY, and most American ETFs; more specifically I'm not allowed to buy or short, though I would ...
1 vote
1 answer
100 views

Is using proceeds from a short sell or put option to cover the cost of excercising a call option considered freeriding?

I heard that freeriding is not having the cash to pay for the underlying shares when a call option is exercised. If I purchase a call option that is ITM and (purchase a put OR short sell) above the ...
0 votes
1 answer
199 views

Iron condor - can the described scenario happen?

Options beginner here. Cannot wrap my head around this. Say I’m trading a long iron condor and the call spread ends up in the money on expiration. Now I can exercise the long call. So should I wait ...
0 votes
1 answer
224 views

Are there stock options on OTC stocks?

I was looking for stock options for the largest companies that actively trade on the OTC market. For example, options on Tencent Holding Ltd. (TCEHY), Roche Holding Ltd (RHHBY), Nintendo Co., Ltd. (...
0 votes
2 answers
345 views

How OPTIONS are settled can be an eye opener and I hope I can get some answers

The only reason why I put it here is to find out whether I am a victim or just ignorant of the way brokers deal with option positions that were exercised. Whether I am a victim or just ignorant ...
0 votes
2 answers
113 views

Why does an option have the term "weekly"?

I am new to option trading. I created a paper account in TD Ameritrade, and I noted some options are termed with "Weekly". Eg "May 15, 2021 (13 days) Weekly 100" "May 22, 2021 ...
3 votes
1 answer
179 views

Taxes: Selling covered calls at a loss

Let's say I own 100 shares of X with a holding period of >1 year and I have 1 covered call option written against those shares. On the day of expiry, it's looking like the stock is up much higher ...
1 vote
4 answers
3k views

Buying back a covered Call

Consider a situation where an investor owns a stock for over a year and sells calls against it that expire in about 90 days. You can assume that this is a qualified covered call for tax purposes. ...
0 votes
2 answers
100 views

if I sell to open a contract and the buyer buys to close a contract, will I get notification?

I'm reading/watching the basics of options trading. I opened a demo account but until now, when I open an option contract, I have only gotten one of these three notifications\messages: working, ...
0 votes
2 answers
114 views

Sell to Open PUT - Assignment of shares before long expiration

I would like to sell 5 contracts (Sell to Open - Cash reserved PUT) for stock C3AI with expiration of Jan 23 for a strike price of 60 (Stock trading at $69 at this moment). That gives me $9800 premium....
1 vote
3 answers
106 views

Can puts work as stop losses?

As far as I see it, the main problem with placing stops, is that the price may rebound in the direction that you originally wanted. You might be out of the trade and have no chance of recovery. Puts ...
0 votes
1 answer
561 views

Do call options expiring ITM increase the stock price?

When call options expire ITM, the shares either need to be transferred (from an existing owner) or bought at the market price. I'm wondering whether this affects the stock price post-expiration? The ...
1 vote
2 answers
163 views

Can option writers "buy to close" if holders refuse to sell?

I am new to option trading. How do we know an option is ITM on the expiration date when the underlying asset price could fluctuate throughout the day? If we short a call/put, understand that we &...
0 votes
2 answers
100 views

Closing out an in-the-money equity option spreadtrade

I put on a debit weekly diagonal ITM put spread trade on stock A selling at $45 : I Buy back week put strike 55 sell front week put strike 50. I am assigned overnight and have to purchase 100 shares ...
0 votes
1 answer
92 views

Bear call spread break even

So I opened my first position last week, a small min risk one to try and see what I don't understand, and it's took a while to improve but things look ok now: https://i.stack.imgur.com/2mF6A.jpg For ...
1 vote
1 answer
92 views

Wash sale clarification on options trading

If I buy deep in-the-money put options, and sell not so deep in-the-money (higher strike priced) put options and if both expire worthless, will I not be allowed to deduct the loss incurred from the ...
0 votes
1 answer
411 views

What is the delivery time of the underlying stock on an option and what is the process?

I am new to option trading. I would like to know: For US options, what is the time frame for the underlying stock to be delivered once the call/put is exercised? If sell a call and I am unable to ...
1 vote
0 answers
38 views

Where Option Credit gets added

I have a question, when you sell options (call or puts) you get credit upfront, but my question is where you can see these credit amounts? In "Stocks & Options" or in "Brokerage ...
1 vote
3 answers
88 views

Do options contracts give you cash or the underlying?

Whenever I read about options valuation, it's phrased in terms of payoff diagrams. For European options, the value at expiry is the difference between the strike and the market price of the underlying ...
2 votes
1 answer
393 views

VEF/USD trading option

Does there exist a VEF/USD (Venezuelan bolivar) spot or derivative market on any public exchange?
0 votes
1 answer
58 views

Old option chain symbols

I am going through my investment history, but there are a lot of option trades that don't make sense. For example, in 2009, "OZC Jan 22 2011 25.0 Put" was the $25 put for QQQ expiring in ...
0 votes
2 answers
66 views

Call Option pricing when OTM

In this example, XLX of the binomial option pricing I am pricing American call options using the binomial method. I was wondering if in the first period (0.1), the price of the stock after a downside ...
0 votes
0 answers
53 views

Price of a Call Option as you Increase the time periods

I'm pricing call options at the moment and seeing how call option prices change depending solely on the periods of volatility. In one case the stock changes every month, the other it changes every ...
1 vote
1 answer
75 views

Binomial option pricing model. Comparing prices

I want to ask a question that may be too obvious for some of you, but: I calculated the price of a call option (expires in 7 months) using binomial pricing model and it is significantly lower than was ...
1 vote
2 answers
216 views

What happens to the put option (longer expiration) of a collar if the call gets assigned?

Assuming a collar strategy where I buy the underlying stock with a short call and long put option on it. Would the call be assigned away like a covered call, leaving the put option viable or would the ...
4 votes
1 answer
1k views

Does selling an OTM covered call affect the holding period of the underlying stock?

Given the following, ignoring commission, etc.: On 2019-03-16, XYZ is trading for $100.00. I purchase 1000 shares, for a cost of $100,000.00. On 2019-09-15, XYZ is trading for $150.00. I sell 10 XYZ $...
2 votes
1 answer
154 views

How and when are CALL/PUT options executed if you're the seller?

Let's say there's a stock trading at $100 and you sell a PUT for $80 that expires the coming Friday. The stock drops to $75 by Tuesday. When are you actually forced to buy the stock? Does the option ...
0 votes
2 answers
549 views

Why is it harder to fill at the mid-point with my new broker?

My old broker (USAA) sold my accounts to Schwab. When I used USAA, I would buy options at around the mid-point, usually. The order would be filled quickly. Now that I am using Schwab, I mostly ...
1 vote
2 answers
2k views

As options expire worthless, how'd Market Makers manipulate share price to close at the strike, so as to maximize profit?

I'm trying to understand the concept of Pinning the Strike by Allan Ellman BS CCNY 1964-1972, DDS NYU 1968-1972. In contradistinction to the penultimate sentence below, presume the conspiracy happens. ...
2 votes
2 answers
348 views

Can a buy order be skipped when price rises rapidly?

I would like to know, if it is possible or likely, that an "out the money" share buy order would be skipped, when a stock prise rises very rapidly. Context: I have 466 shares of tesla. I ...
1 vote
1 answer
104 views

If I buy to close a call position and the option writer defaults, am I liable for the original position?

Let's say that I sell covered calls and they are purchased by Alice. Later, I buy these calls (which were written by Bob) to close my position. Let's say that Bob's short calls were naked. Suppose ...
0 votes
0 answers
95 views

Why broker charge me for BORROW fees when I have a long unsettled position as well to counter the short in the same account [duplicate]

The only reason why I put it here is to find out whether I am a victim or just ignorant of the way brokers deal with option positions that were exercised. Whether I am a victim or just ignorant will ...
1 vote
2 answers
960 views

What should I do if my cash secured short put is deep in the money?

Due to the recent market situation, many tech stocks are losing their value real quick. I sold a put last month with strike price $80, and it is going to expire by the end of this month (3 more weeks ...
25 votes
7 answers
4k views

Better terms to use to understand Puts and Calls for options trading

I've been trying to learn a little about options trading, specially puts and calls. The term options works well for my brain because someone is buying or selling the option to buy or sell something. ...
42 votes
10 answers
49k 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?
0 votes
2 answers
479 views

What would happen if the number of active options is higher than the number of floating share?

I am learning the concept of Gamma Squeeze from The Motley Fool. Under the "Why options trading can create stock volatility" section, it is mentioned that for options trading: chances are ...
0 votes
0 answers
445 views

Order rejected: Today's expiring option series on this symbol are Closing Only

Rejected Buy to Open 1 Order rejected: Today's expiring option series on this symbol are Closing Only. TDA gives me this response when I try to buy 1 call option OTM The volume and open ...
1 vote
2 answers
329 views

Writing ITM Call Option For Extra Profit

Say I buy 100 shares of XYZ at $20 a piece, and it rises in price to $25 a share. Is there any downside to writing/selling an ITM call option at a strike price of $25/share as far as I can in the ...
-1 votes
2 answers
234 views

Can selling naked calls create counterfeit shares?

I understand that illegal naked shorting can lead to FTDs since same share can be loaned out and shorted multiple times. This can lead to a situation where >100% of a stock's float is shorted (Ref: ...
1 vote
2 answers
121 views

When it comes to options, is there a "house" like with a sports bet bookie?

While learning about options trading, the following question came up. I'm hoping someone here can help answer it. Please excuse any (likely) imperfect terminology and understanding. Are call and put ...
0 votes
2 answers
354 views

Very high strike price for call option (GME)

I noticed that there are many call contracts on GME at a strike of $800 that expire in 5 days. Currently the price of GME is at $110. I'm just wondering why anyone would go for such a high strike ? ...
2 votes
1 answer
327 views

As a put option buyer, do I potentially suffer a loss higher than the premium if I forgot to close the option when it is in the money

Many sources only mention that if the option expires worthless, I will lose the premium as the maximum loss. But in reality, I can also lose money higher than the max loss even if my put option is in ...
4 votes
8 answers
3k 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?
1 vote
2 answers
113 views

Call option strike prices don't exceed stock price?

I noticed that some options have strike prices that don't exceed the current market price of the underlying stock. Why would this be? For example, GameStop doesn't have any strike prices above $60 for ...
2 votes
1 answer
6k views

How can Volume be greater than Open Interest?

Notice how at the strike price of 30 and 35 for Puts, you have volume at 22 and 7, but Open Interest at 0. If volume is the number of trades made a day, and Open Interest is the number of contracts ...
1 vote
0 answers
68 views

Non-US citizen/resident trying to begin trading options and futures

I'm from Brazil and I already trade shares, options and futures here for ~5 years in the Brazilian stock market. I began trading shares in the US stock market a few months ago using the Passfolio ...

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