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Note: I am new to options and not very experienced.

There are generally no free meals in life, and in the stock market, if something is too good to be true, it is. I have researched this question before and found a similar question on this Stack Exchange: Free Money with Options? Many of the answers were really helpful, but all pointed towards one thing:

The ask for the option was more important than the Last Price or Bid.

I am just incredibly confused, because I have found many Put options on Yahoo Finance where the share price was well below the Strike Price, and the ask was absolutely tiny. Even more unbelievable was that these American Style options had an expiration date two or three months away.

Example: AAPL is currently trading at about $110, but according to Yahoo Finance, the ask price for its Jan 2021 $400 put options is $0.20:

AAPL Jan 2021 put options

Columns from left to right: Contract Name, Last Trade Date, Strike, Last Price, Bid, Ask, Change, % Change, Volume, Open Interest, Implied Volatility

If this is a stupid question, or if I have not been clear enough in the way I asked, please let me know. It just seems highly improbable that these options are legitimate and very profitable.

  • Wait, these are puts ? – Fattie Oct 28 at 14:43
  • Welcome new user, there are no stupid questions. Further, basically every single question on this site is now about options, so, no worries! – Fattie Oct 28 at 14:44
  • Yahoo Finance. AAPL Jan 2021 400.000 put. Strike Price is 400. Apple Stands at about 115. Ask is 0.20 – Taidgh Mullins Oct 28 at 15:19
  • @TaidghMullins Seems likely that's from the old chain before the recent split. On current option chain I don't see puts above 250 listed. – Hart CO Oct 28 at 15:22
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    Another clue is the quote timestamp: "As of August 28 3:56PM EDT" – D Stanley Oct 28 at 15:33
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You are looking at bad data. The data is outdated. AAPL is now trading at about $110 per share. AAPL had a four-for-one stock split back in August 2020 (source). Before the split, AAPL traded at more than $500 per share. This explains the (now incorrect) low price for the $400 strike put option.

You can find the correct options chain on CBOE's website:

AAPL Jan 2021 options chain on 2020-10-28 11:46 ET from CBOE's website

You can also see the options chain on NASDAQ's website:

AAPL Jan 2021 options chain from NASDAQ's website

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  • Thanks a lot guys! Quick question: do profitable premium ITM Options come up in live markets often? – Taidgh Mullins Oct 28 at 15:38
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    @TaidghMullins Of course not. If they existed, they would be quickly arbitraged away by institutions with far more resources than any of us here. – Flux Oct 28 at 15:53
  • Do profitable premium ITM Options come up in live markets often? Profitable options occasionally appear but not in the context of your question. Occasionally you can find some option arbitrages (conversions, reversals, box spreads) for pocket change but you can't get size and it's not worth it for the amount of principal required. The market maker has the edge because he can buy at the bid and sell at the ask. – Bob Baerker Oct 28 at 16:32
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The ask for the option was more important than the Last Price or Bid.

One isn't more important than the other. Which one is relevant to you depends on whether you are buying or selling.

I am just incredibly confused, because I have found many Put options on Yahoo Finance where the share price was well below the Strike Price, and the ask was absolutely tiny.

There are several problems with your data. First, it's from August 28th when AAPL was a bit over $500 (before the 4:1 split).

More importantly, your data is worthless. Yahoo quotes are delayed and even worse, look at the time stamp for each of the 5 options displayed. It ranges from 1:09 PM to 3:56 PM so you are looking at the last trade for the option which occurred at various prices of AAPL during the day. IOW, the 400 put is 20 cents and the $405 put is $17.25 ??? It's BAD DATA.

If you want to compare the options, look at real time data.

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