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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0
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1answer
33 views

Why buy a vertical spread if I could instead buy a naked call?

If I believe a stock will go up, say from a price of $100, and I wish to execute an options strategy that would make me money if the stock were to rise, why would I want to setup a vertical spread ...
3
votes
4answers
163 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 ...
3
votes
2answers
36 views

Question about option chain

https://beta.finance.yahoo.com/quote/GOOG/options?ltr=1&date=1516320000 OK, can't I just SELL "350 @ $395 and BUY "340" @ $391 and pocket $4 immediately and realize another $10 if and when the ...
1
vote
5answers
664 views

Why does an option lose time value faster as it approaches expiry

What is the reason (without getting too mathematical) that an option loses its time value in a non linear fashion (a.k.a. the time value is lost gradually at first and becomes very rapid in the days ...
0
votes
2answers
66 views

Open Interest vs Volume for Stock Options

Wanted to double check my intuition - What if there is only one trading day and the volume is smaller than the open interest on that one trading day. This is assuming there is no open interest before ...
0
votes
4answers
97 views

How liquid is options market?

My strategy invloves making profits by the increase in "Implied volatility" through long straddles/strangles. Enemy: Time decay. I am aware that the time decay accelerates. I read, For a 9 month ...
8
votes
3answers
46k 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 ...
6
votes
5answers
3k 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 ...
0
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0answers
12 views

Pricing American Options in Continuous Time Framework

As part of my project i need to create a model to price American put options in continuous time framework. Any ideas how to start? Any good read?
0
votes
2answers
44 views

Call option- premium fall with rise in spot price

The premium of the below call keeps falling although the price is increasing and it still has more than a month until expiry. The current spot price is 392. Shouldn't the in the money strike premium ...
0
votes
1answer
48 views

How much money are you actually trading with options?

In my Investments class we are trading options. I bought a TSLA call option for 8.80. I know that options come bundled in groups of 100. So did I actually invest $880 or did I only invest 8.80? I sold ...
0
votes
1answer
21 views

Where can I buy European-style options?

My broker (Ameritrade) makes several options available in their platform (thinkorswim). It seems like these are mostly American options (can be exercised at any time). There does not seem to be any ...
2
votes
5answers
232 views

Should a strategy backtested against three years of tick data continue to produce positive results?

Let's say we have a Binary Options 5-minute trading strategy that relies on multiple indicators and exploits price reversals in currency pairs. Now let's say there is a combination of inputs for the ...
1
vote
4answers
105 views

Comparison between buying a stock and selling a naked put

Suppose one wants to invest in company X, whose stock is selling for, say, $100/share. What are the differences in profit potential between buying 100 shares and repeatedly selling a naked put at ...
3
votes
2answers
164 views

Will my money be safe in my trading account during a market crash?

I am an options trader. Imagine when I am peacefully trading on my trading account with my broker, the market collapses and causes a recession or depression. Now can I continue to trade during the ...
0
votes
2answers
48 views

If Option prices are publically quoted on an options exchange, why do people use Black-Sholes to estimate their price?

I always wondered why the Black-Sholes-Merton model was used to estimate the price of European-style options when their prices are available on quoted exchanges? I think I am missing something big ...
0
votes
1answer
42 views

How disciplined are companies in sticking to the announced earnings announcement date?

My options strategy depends on the earnings announcement date. Do all companies disclose earning announcement dates well before the date? Or do they announce as a surprise? How often do they ...
0
votes
2answers
42 views

Is there strategy to qualify stock options with near expiry date for long term capital gain tax?

I am trading stock options. Typically I hold them for few weeks; sell them and wait for the next opportunity to trade them again. However, now I have been wondering - is it possible somehow to ...
3
votes
1answer
37 views

Why do some expiration dates have more open interest for options?

Looking at the options market I noticed that some expiration dates have a lot more open interest than others. A good example is April 15th. Almost every company I've looked at has a very large open ...
6
votes
8answers
15k 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 ...
2
votes
1answer
29 views

Is there a way to see how much leverage a mutual fund or ETF is using to generate a return

I am taking over some of my IRA and 401K money and I want to move towards a more value based approach with an emphasis on dividends. One thing I have learned on this quest is that most options have ...
1
vote
0answers
14 views

Reporting of 1256 Based Options

I live in the United States. In 2015 I have traded several 1256 based options. The details of each trade were not included in my 1099 and not imported into Turbo Tax. I understand that this is to be ...
0
votes
1answer
45 views

Capital gains tax on 1256 based options

If an investor writes a 1256 based option $1000 in January and the option expires worthless in February that is a capital gain. Is it true that, since it is 1256 based, that the capital gains are ...
4
votes
1answer
178 views

How can I bet against oil in the long term?

I want to bet against oil over a long term period (5-10 years, let's say). What is the best way for me to go about this, i.e what should I purchase and how?
0
votes
2answers
79 views

Is it possible to know the probability that a trade is successful?

I'm trying to model the distribution of different outcomes of day trading every day for a year. I'm starting with $350 dollars. I'm only doing options trading on Apple stock with a 5% stop loss and a ...
4
votes
3answers
180 views

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

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 ...
3
votes
4answers
624 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?
2
votes
2answers
107 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?
3
votes
2answers
147 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?
-2
votes
3answers
377 views

Are binary options really part of trading?

I watched many videos and read many tutorials about binary trading. If I really understood it, you bet that a quote/currency/stock market/anything will rise or fall within a period of time. So, ...
1
vote
3answers
2k views

Specifically when do options expire?

Take these calls for example: Call Time of expiration SBUX Jan13 55 Call 2012-01-18 4PM EST FIO Jan13 22 Call 2012-01-18 4PM EST FB JanWk4 32 Call ...
0
votes
3answers
108 views

Is it better to buy put options or buy an inverse leveraged ETF?

Let's say you think the market is heading down in the next 6 months. Is it better to buy put options of an ETF (e.g., SPY) or buy an inverse ETF (e.g., SH)? or a leveraged inverse ETF (e.g., SPXU) to ...
3
votes
1answer
135 views

What is a bull put spread?

When someone in the stock market says they are going to do a bull put spread, what does that mean, and what services do they use to do it?
0
votes
1answer
135 views

What is the difference between a structured collar and a normal collar in finance?

How is a structured collar different from an ordinary collar? I failed to find information about the difference online.
1
vote
4answers
273 views

Why are options created?

At the moment I have to juggle with basics of FX OPTIONS. As for every other financial instrument that we use today, those have been invented as an answer to a question/bottleneck/problem one might ...
3
votes
1answer
197 views

When offered options as part of a package from a 2 year old startup, how is the strike price derived?

When startups hire new senior people I understand that it is common practice to offer options, often over a period of 4 years. However, the actual value of these options will depend highly on the ...
0
votes
0answers
36 views

Why are some calls priced inaccurately?

I'm new to the world of options and my friend noticed this anomaly. The price of a call at 195.00 for TSLA is priced way above similar strike prices (up > 500% today). Is there any reason for this? Or ...
1
vote
1answer
64 views

How are options traded on exchanges priced?

First, my knowledge is limited and I am still learning. I understand that each bank has various models to price options and that the prices vary based on these models. If this is the case, how are ...
2
votes
1answer
77 views

Why don't options chain prices vary smoothly?

I'm looking at options chains for SPY for some particular expiry date. I'd expect that the last trade prices would vary smoothly with the strike price. But they don't; there are occasional puts that ...
0
votes
0answers
53 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 ...
2
votes
2answers
88 views

Hedging against an acquisition of a stock

Let's say I have done research and have a view that a public company's stock will go down due to worsening fundamentals. So normally then, one can express that view by shorting the stock. However, ...
0
votes
0answers
11 views

Bid ask spread on a mutual fund containing derivatives

On mutual funds with bid and ask prices, It is my understanding that these prices should be close to the bid and ask prices of underlying securities according to their weights in the fund, divided by ...
7
votes
3answers
4k 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 ...
1
vote
1answer
186 views

Tropical Trade Stock Trading

Is Tropical Trade a valid stock trading company? I would like to start investing but I want to know the validity of the trading company.
1
vote
1answer
134 views

Berkshire Hathaway and Covered Calls

An investor owns several shares (like 2 or 3) of Berkshire Hathaway Class A shares. He sells 5 call contracts on class B shares and then buys them back at a loss. For purposes of taxes, were the calls ...
0
votes
1answer
82 views

Anyone know if IG or Plus500 are scams or not?

I have been doing some research into online trading and came across 2 platforms that are pretty good and user friendly. http://www.IG.com and http://www.plus500.com I have read quite a lot of reviews ...
0
votes
5answers
5k views

Why call option price increases with higher volatility

As per the BS model the value of a call option is directly proportional to the volatility. Without getting into the derivation of the BS equation, is it possible to intuitively understand why this is ...
3
votes
3answers
69 views

Options profit calculation and cash settlement

I have a question regardnig call options. For example: 108-strike AAPL options expiring Dec 24th are 83 cents. That means the cost of one contract would be 83 + 5 (commission) = 89 dollars ...
1
vote
3answers
80 views

Unemployment Insurance Through Options

Both Kyle Bass (from about 8:00 - 9:40) and Mark Spitznagel discuss an approach to finance where an investor takes a small percentage of their wealth and bets on an unlikely outcome, expecting to lose ...
3
votes
1answer
56 views

What happens to a call option in a cash/stock acquisition?

Let's be specific. I hold April 2016 135 calls for CB (Chubb). CB is being acquired by ACE. The deal is $62.93 per share in cash and 0.6019 share of ACE stock for each share of CB. The deal is ...