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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2answers
41 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
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1answer
128 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.
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4answers
251 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
195 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 ...
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0answers
30 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
69 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
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0answers
49 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
74 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
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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
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3answers
3k 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
90 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
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4answers
540 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 ...
1
vote
1answer
131 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 ...
2
votes
5answers
178 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 ...
0
votes
1answer
60 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
3k 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
55 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
74 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
42 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 ...
6
votes
4answers
3k 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 ...
3
votes
1answer
58 views

Taxes, Puts and the Wash Rule

If an investor sells a stock at a loss and on the next day, he sells a put on the same stock, does the selling of the put trigger the wash rule? Does it matter if the put was sold out of the money? I ...
0
votes
3answers
93 views

When can we exercice an option?

Can we only exercice an option when it expire ? For exemple I have an Adobe option with a strike price of 87.50$ and expiring on 2016-01-15. Adobe stock have already raised above my strike price. ...
0
votes
1answer
59 views

VEF/USD trading option

Does there exist a VEF/USD (Venezuelan bolivar) spot or derivative market on any public exchange?
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0answers
38 views

Trading intraday fluctuation vs. volatility-based option

Recently a question was asked about actively trading stocks based on small fluctuations in price. It seems like if you wanted to do the strategy described here, you might as well buy an option like a ...
0
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0answers
41 views

Yuan USD Option

Are there any possibilities for a retail investor to buy a USD/Yuan option other than the ones on the CYB ETF and those from Goldman Sachs? The idea is to bet on a lagre depreciation of the Yuan.
2
votes
5answers
681 views

Options vs Stocks which is more profitable

Assuming I enter a stock at $100/share. The stock goes up 3% over the course of two days, I then sell the stock and collect my profits. How would this compare to me buying a call option contract for ...
13
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2answers
16k views

What happens to options if a company is acquired / bought out?

I have some out of the money options with pretty far off expiry dates (Jan 2013, for example). What happens if the underlying company is acquired before then, while I'm still holding the options? Do ...
0
votes
2answers
54 views

How is the time-premium on PUT options calculated

I have some PUT options in AAPL, and I thought I understood how options pricing worked on a basic level but I must be missing something. Today the AAPL stock dropped $3.38, and I expected my PUT ...
0
votes
3answers
65 views

Emulating a 'long straddle' without buying or selling Options?

If I go long and short a stock simultaneously, with a 1:50 leverage, and place a stop loss on both for when a 10% loss is reached, isn't this the exact same principle as the long straddle strategy ...
3
votes
3answers
2k views

Do stock option prices predicate the underlying stock's movement?

I am trying to understand if my thinking is correct or not. I am looking at a stock that is @ $10.00. When I look at the options on the stock $11, $12... calls are all down today and $11, $12... ...
1
vote
5answers
106 views

Why do I get a much better price for options with a limit order than the ask price?

When I'm buying an option, I notice that if I set a limit order for in between the ask and bid - say half way, I can often get the option at that price. Why is it that way? I thought the ask price ...
6
votes
6answers
13k 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 ...
0
votes
4answers
157 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: Let's say I have $20.000 in my brokerage account Suppose there are call option with strike 300 (and ...
2
votes
2answers
127 views

Total price of (AAPL option strike price + option cost) decreases with strike price. Why?

I'm looking at apple options and found this strange pricing in the options table. It seems like if you buy a lower strike price your total cost for buying the stock and options is much less. Why is ...
0
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2answers
135 views

May I Invest as a non accredited investor?

I want to join a website where they allow only accredited investors to participate in investments that they manage. I am not an accredited investor. However, in the past, I worked for the company and ...
3
votes
3answers
579 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?
3
votes
2answers
184 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?
0
votes
0answers
41 views

Where is the liquidity on European derivatives exchanges

This has bugged me for a long time, and I feel like I am missing some information. When I browse Eurex, a derivatives exchange in Europe, I don't see the kinds of liquidity I would expect. For ...
3
votes
2answers
220 views

What rules govern when a new option series is issued?

As I'm typing this, the CBOE quotes and data page lists GOOG and FB options with expirations of September, October, November and December of 2012. But AMZN and GS only get September and October of ...
3
votes
1answer
59 views

Is it commonly possible to buy an “Option for a Mortgage at a specific Interest Rate”?

I'm newer to investing, but I've come across options contracts now and then which to my understanding allow the option to buy or sell a stock at a certain price. After a discussion with a coworker at ...
1
vote
2answers
29 views

Is there an online tool to help purchasing option spreads? [closed]

I'm pretty new to futures trading and I'm wondering if there is an online tool to help look at various spread options contracts? I'm interested in getting some experience trading futures with pretty ...
0
votes
2answers
88 views

How safe is an option contract?

I know the Options Clearing Company guarantees the fulfillment of every option contract and it never happened that a option contract defaulted in history. So what could you imagine must happen so a ...
5
votes
3answers
5k 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 ...
0
votes
1answer
116 views

Stock Options for a company bought out in cash and stock

I have 3 options in August for the $195 call strike. The company was just bought out for $230 dollars which was $125 cash and the rest in stock. What is my option worth since part of it is in the ...
0
votes
2answers
82 views

How to sell large amount of options?

If the amount of contracts to sell is about 2-3 times the average daily volume, the bid size is usually higher than the contracts to sell, the ask premium price is about 8% above the bid, how would ...
0
votes
0answers
59 views

Hong Kong Dollar Options

I would like to bet on a de-pegging of the Hong Kong Dollar from the USD. Even though the volatility is perfect for an options trade, it seems hard to find any for the retail investor. Is anyone aware ...
2
votes
1answer
82 views

OTM puts or ITM puts in fear of market crash

If I own some shares, but at the same time I am afraid of a market crash, should I buy OTM puts or ITM puts?
1
vote
1answer
169 views

How can I calculate the exposure of future option? [closed]

quantity * delta * index quantity * delta * (index - strike) quantity * delta * min(index - strike, 0)
5
votes
2answers
456 views

Options for the intelligent but inexperienced

(Related to "Options for Dummies" and "What are some good options strategies...") I've been an investor in stocks for the past 14 years and have the confidence that I know what I'm doing. (Not that I ...