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I read the other posts about how implied volatility can affect the option price. However, I still cannot explain the following situation. The underlying stock is down 8%, and most of the PUT options are up. However the 2 with the lowest strike price are down the most. The CALL options do seem to have a predicted range in price.

What could possibly explain the differences between the several PUT options?

Broker option prices

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  • Can you be more specific about what you mean by "price"? Do you mean the last trade's price, or the bid & ask prices? Commented Oct 27, 2021 at 16:04
  • Since market opening the underlying stock was down 8%, while the PUT option price for PUT 50 was also down 21%. This is odd for a PUT, buy maybe that's because of the IV. However, the PUT 65 is up 44%. I don't see how one PUT can be up, while the other can be down.
    – Bas
    Commented Oct 27, 2021 at 19:26
  • Are those November 19 expiration? Also, are you not understanding why most of the puts are up or just not understanding why the OTM puts have gone down?
    – Hart CO
    Commented Oct 28, 2021 at 0:14
  • They are November 19 expiration, yes. And indeed, I don't understand why the OTM puts have gone down They were OTM when I bought them. Hasn't the stock price moved closer to the strike price? That would mean the odds of them becoming ITM at expiration has gone up. Wouldn't that increase the value instead of decrease it?
    – Bas
    Commented Oct 28, 2021 at 5:56

1 Answer 1

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There are several reasons why quotes can appear distorted:

  • The quotes are stale (the option is illiquid and you're seeing a last trade price that occurred earlier in the day.

  • The bid/ask spread is wide and a trade at one of them is some distance from the previous trade at the other.

  • A provider is displaying bad data.

  • Most important of all is a large contraction in implied volatility. This is the likely culprit since Twitter announced earnings on 10/26 and the average implied volatility of its options contracted from about 62% to 42%. Therefore, all options were affected significantly.

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  • Thanks. It's definitely not the first 3. The last would make sense, but why would the PUT 50 lose value and the PUT 60 gain value in this situation?
    – Bas
    Commented Oct 28, 2021 at 5:58
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    I couldn't tell you why that put is out of kilter without seeing real time quotes or in hindsight, Time and Sales. Commented Oct 28, 2021 at 14:02

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