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This tag is to be used for any question on call-options. i.e. a agreement or right to buy a stock or commodity at a specific price. Related tags [put-options, options, options-assignment, option-exercise] should be used when appropriate.

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1answer
62 views

Robinhood covered calls

If i buy 1 call option and then sell 1 call option. Is that classified as covered? I don't actually own the shares, i just own an option to buy them. Robinhood allows me to do this even though i dont ...
23
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4answers
6k views

My out-of-the-money call options are near expiration and won't sell in the open market. What are my choices?

I had attempted to sell my contracts off today but was unsuccessful. They are currently OTM options and will expire tomorrow. What can I do to minimize loss and why was I unable to sell?
0
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2answers
38 views

Bull call spread

My textbook says the following for a bull call spread. "In the bull call spread, you sell a call with a lower strike price and buy a a call with a higher strike price. The call spread is a credit ...
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2answers
148 views

Massive Deep Out of the Money Call Option Transaction

I am relatively new to options, however something has caught my eye. I see this case of a single leg deep out of money HES Aug 10 call option with a very large transaction of 4,373 contracts completed ...
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1answer
50 views

Indications of Buy or Sell to Open — Time and Sales Window

I am using Thinkorswim trading platform and came across something I do not understand. The options chain is as seen below with 10 open interest and volume of 315 at strike 55, (added: bid ask spread: ...
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3answers
64 views

Why does increased volatility always mean higher call prices?

I understand that apparently implied volatility of a call option increases as the underlying price of the stock deviates further and further from the moving average. That mostly makes sense, because ...
0
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1answer
72 views

Understanding on closing an option

I have read that there are three scenarios when it comes to closing an option: You can buy or sell to “close” the position prior to expiration. The options expire out-of-the-money and worthless, so ...
2
votes
2answers
60 views

Do knock-out call options become worthless when the underlying stock is split?

Suppose you own KO call options based on a stock. The knock-out level would be at $90, the stock currently is at $100. But then the stock is split 1:2, so suddenly the stock is worth $50. Do the ...
2
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1answer
59 views

Selling Covered Calls, will online broker sell shares automatically?

Let's say I own a share of a company at $100, and I sell a call option for this company for $5 with a 6 month expiration, and a strike price of $110 (all arbitrary numbers). If the share price rises ...
12
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5answers
4k views

Can I buy an out-of-the-money call and then sell it before it reaches the strike price?

I'm new to options trading so if this question does not make sense or is stupidly easy please bear with me. I'll try to show my thought process through an example. XYZ is currently trading at $100. ...
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4answers
2k views

Trading Options (Call on Robinhood App)

In the attached image you will see the Robinhood app shows that if I purchase the Call I will "have the right" to "purchase" 100 shares. Does this mean I have to have the funds to purchase the 100 ...
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4answers
2k views

Why is XYZ $70.5 strike call more expensive than $68 strike call?

The link below shows the February 16 call option listing for company XYZ. I used to think that, the higher the strike price, the cheaper the call option. Obviously, the price pattern for this ...
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3answers
188 views

Wouldn't it always make sense to be an Option Writer (seller)?

I've read multiple times that options are rarely, if ever, exercised, and 90+% usually expire into nothingness. If that's the case, wouldn't you always want to be an option writer? If nobody is ever ...
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1answer
62 views

Hedging a long/short equity position with options?

If an individual was considering: LONG 100 AAPL shares at 150 SHORT 100 APPL shares at 150 How could he/she hedge the directional risk with options for those two trades? And what would be the ...
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2answers
149 views

How can an option seller get out of a contract?

I was recently on Optional Alpha, which provides an overview of how to trade options, from A to Z. During one of the videos/lectures, there was an introduction for: buy to open, sell to close, sell ...
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3answers
124 views

Confusion about trading options

There is one thing I do not get about trading options (let's restrict this to calls), and no online resource I've come across seems to talk about the following scenario. There are 3 parties in this: A,...
3
votes
2answers
158 views

Stock options: payoff diagrams assume European style exercising

Most literature on stock option strategies expresses payoff outcomes in terms of European options -- namely, ones that can only be exercised on the expiration date. See this Iron Condor payoff ...
2
votes
2answers
80 views

Options “Collar” strategy vs regular Profit/Loss stops

So I just found out about "collar" strategy implemented with long put and short call options. From my understanding that limits both potential profits and losses from the underlying stock, and, if ...
1
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1answer
78 views

fair price of call option in this problem

The price of an asset can move to only two values – USD 102 and USD 98 – over the next month. The probability of a price rise is 99%, while the probability of a fall is 1%. The annual simple risk-free ...
0
votes
1answer
146 views

Why doesn't someone choose the lowest Strike Price when choosing an CALL option?

When choosing an CALL option there are always a bunch of strike prices that are IN THE MONEY. My understanding is if buyer chooses the lowest strike price and though pay a high premium then break even ...
0
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0answers
19 views

Does the value of underlying stock stay the same regardless of the strike price? [Put/Call Parity]

I'm currently working on the below problem: Consider European options on a stock expiring at time t. Let P(K) be a put with strike K and C(K) be a call option with strike price K. Given the ...
3
votes
4answers
379 views

How do I hedge stock options like market makers do?

I understand what an option is and I know that a market maker always publishes a bid and an ask price for which it will buy or sell options on the exchange. Now I heard that market makers always hedge ...
3
votes
1answer
182 views

How exactly is implied volatility assigned to an option's strike price?

I'm trying to understand implied volatility (IV) better. Recently, I was looking at $YUMC's option chain (date: 07/10/2017) and in particular the 27.5 strike price with an IV of 0%. I'm trying my ...
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6answers
2k views

Why would someone want to sell call options?

I'm having trouble understanding why someone would want to sell call options. For example, if the writer of a call option owned the shares and they expected the share price to fall, why wouldn't they ...
0
votes
3answers
493 views

How to Calculate the Expected Move of a Stock

I've been trying to determine how to calculate the expected move of a stock, and I've found there are several ways to do this but most of my findings usually lead me to this formula: Unfortunately ...
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3answers
74 views

Selling To Close

Is it possible to sell to close a call/put option I own for a profit even if the underlying stock price has not exceeded the strike price? If my cost basis is .10 per contract and that same option is ...
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2answers
125 views

Price of a call option

Any explanation for why a call option would be priced so low per contract like the following example: Current stock price $3.90 / Call / Jul17 / Strike $2.50 / Ask .05 / Ask Size: 20 I've seen a few ...
3
votes
1answer
85 views

Is it possible to see option prices from the past?

For example, I can look up what a companies stock price was like in the past, but I can't look up an option chain from the past.
0
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1answer
184 views

Settlement of Shares Underlying a Covered Call Option

If I buy 100 shares of XYZ stock one or two minutes before selling one XYZ call option, would this call option be considered "covered", or would it be considered "uncovered" until the 100 shares ...
7
votes
4answers
1k views

At what time of day does time value fall off of a call option?

As days tick off of call options, time value decays. My question is does that happen automatically at 9:30AM at market open or does it get continuously deducted as the day ticks on?
3
votes
1answer
56 views

How are option contracts assigned?

If I'm short a call, and the contra exercises their option, how is that assignment tracked back to me? Is the other side of my contract tied to a specific buyer? How does the OCC know to assign my ...
0
votes
1answer
295 views

What does a high theta mean for an option position?

I have a Call Spread for a position in TSLA that has a theta of 15.67 with 43 days left till expiration. I can see that it's comprised of a 64.71 and a -49.04 theta. How can I best understand what it ...
1
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1answer
46 views

Borrowing share with a covered call for short?

I was wondering if I could increase the premium from my long term hold by providing them to my broker as a short sale stocks? My main question is that are there any implication on the fact that I ...
0
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2answers
78 views

When buying a call option, is the financial stability of the option writer relevant?

A call option allows a person to buy a stock at some future date for a specified price. By implication, if it is "in the money" you'll be able to buy the stock at a potentially deep discount. So it ...
1
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1answer
76 views

What is the skew of a volatility smile?

My book says that the skew of an implied volatility smile is the slope of the curve. But then it says that the skew is 0.25 %, i.e., if K goes DOWN 1, implied volatility goes UP 0.25 %. However, ...
0
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1answer
41 views

In option pricing formulas, is the volatility and short rate a decimal or a percentage?

In the BS option pricing formula, when entering values for volatility and short rate, do we enter them as percentages or decimals? Take the time unit to be a year, i.e. if we want to price something ...
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1answer
122 views

Bid price… sudden Drop

I have a call option that is 45 day out from expiration. The stock price is sitting at about twice my strike price. Why did my bid price dropped from $2.00 to .10 in one day? Is my only option now to ...
3
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0answers
63 views

Option exercise timing / OCC operating principles (premarket)

Let's assume the following scenario: American style long call option contract heavily in the money (CBOE) Couple of days to expiration Very high risk that underlying asset will fall sharply when ...
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2answers
500 views

Effect of company issued options on share price

A company has 100,000 shares and 100,000 unexercised call options (company issued). Share price and strike price both at $1. I assume the fact that these options exist will slow any price increases ...
4
votes
2answers
1k views

What happens to an options contract during an all stock acquisition?

Let's say for the sake of the question you're given the following scenario: Company BIG is trading at $10/share Company SML is trading at $40/share BIG reaches an agreement with SML for an all stock ...
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0answers
165 views

Difference between call and maturity values for preferred stocks

According to this quote from InvestingAnswers, a preferred stock might have a call date and a maturity date. But, if a preferred stock has both, it would seem the issuer is not going to pay out twice....
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2answers
539 views

What happens when a calendar spread is assigned in a non-margin account?

A well-known option investment strategy is the so-called "calendar spread", which involves buying and selling options on the same stock with different expiration dates. If the strike prices are also ...
2
votes
2answers
133 views

When a near term outlook on an asset is negative, is it possible to make money using both put and call options?

This question is about Put options. These contracts give the buyer the right to sell some underlying asset at some agreed strike price at or before (American style contract) the expiration date. Call ...
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4answers
105 views

Value of a call option spread

In this example: An options trader believes that XYZ stock trading at $42 is going to rally soon and enters a bull call spread by buying a JUL 40 call for $300 and writing a JUL 45 call for $...
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3answers
880 views

Selling put and call Loss Scenario Examples

I am building selling portfolio for option trading. I can find buying call and put scenario but no scenario for selling and losing side. For e.g. If buyer exercised put option, what happened on ...
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2answers
81 views

Is this True about Put option

I was reading on option trading put option. They have stated that Volume on put option is less then the call option. Is it true? If it is why ?
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3answers
703 views

Why naked call writing is risky compare to Covered call?

From my knowledge-- I know for sure that Covered Call: Requires you to owe underlying share before writing option and Naked call you don't have to but if you lose you are obligated to sell ...
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1answer
51 views

What happen in this selling call option scenario

I am beginner in trading. So scenario is: For e.g. until the expiry date i want the stock value to stay at $50 or less. But what happen if the stock price went high and then go down near expiry date?...
0
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1answer
68 views

Call Options and Put Options

If I have a call option, which I long, with a strike price say, AUD 1.5/$, in english, is that "the right to buy 1$ for 1.5AUD" or "the right to buy 1.5AUD for 1$"? Please help me :)
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2answers
155 views

What to think of two at the money call options with different strike prices and premiums?

Suppose a stock is trading for $50. Further, suppose there is some call option A, which has a strike price of $40 and a premium of $10. Furthermore, suppose there is another call option B, which has a ...