Stack Exchange Network

Stack Exchange network consists of 175 Q&A communities including Stack Overflow, the largest, most trusted online community for developers to learn, share their knowledge, and build their careers.

Visit Stack Exchange

Questions tagged [call-options]

This tag is to be used for any question on call-options. i.e. an 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.

1
vote
4answers
124 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 $...
1
vote
2answers
49 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 ...
2
votes
2answers
350 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 ...
1
vote
1answer
280 views

How does a dividend announcement affect a option straddle position

If I buy an at the money straddle, hoping to profit from a volatility increase, then how does an underlying dividend announcement affect my PnL? I am thinking that if the underlying announces a ...
2
votes
3answers
219 views

Options “Collar” strategy vs regular Profit/Loss stops

I just found out about the option "collar" strategy which is implemented with a long put and a short call. My understanding is that a collar limits the profit as well as the loss on the underlying ...
5
votes
3answers
1k views

Covered calls: How to handle this trade?

I bought XNPT (Xenoport) a couple of weeks ago at 6.93 I turned right around and sold the Apr 16 call. $8.00 strike and collected 1.50 in premium. Today I get a great surprise that XNPT has rocketed ...
1
vote
1answer
2k 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 ...
12
votes
4answers
687 views

Covered Call Writing - What affects the price of the options?

A little while ago, I bought $800 worth of stocks and sold about $200 worth in call options against the stock. I think it was 200 shares and 2 contracts (so my options weren't naked). That takes the ...
0
votes
2answers
107 views

Options tax treatment

Suppose I want to write a covered call on my 100 shares of AAPL that I have held for over a year. If I sell a covered call of AAPL 125 in December 2015 with a June 2016 expiration, and the premium on ...
2
votes
1answer
109 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 ...
4
votes
2answers
857 views

Calculating profits on a covered call. What method do you use?

Hey guys. I was having a discussion with someone about calculating profits on covered calls and I thought I'd ask the community's advice on which way is correct. I buy.... - 100 shares of XYZ at $7....
1
vote
2answers
72 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 ...
1
vote
1answer
496 views

Accounting Entry for Selling a Covered Call

I recently started looking at trading options and started with the time honored tradition of selling a covered call. What I don't understand now is what my trading platform (TD Ameritrade) balances ...
2
votes
1answer
664 views

Sell covered call on an index option

When I trade an index option (SPX), there is no actual trading going on in the underlying (as opposed to SPY). But some option strategies (like covered call) by definition require a position in the ...
-1
votes
1answer
326 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 ...
3
votes
2answers
9k views

Difference between Black-Scholes, Binomial models and Market price in European index options?

Need some help! I have calculated the theoretical price of an index option using BS and Binomial models and are now comparing the three. While BS and Binomial have approximately the same value, ...
1
vote
2answers
118 views

What would happen if you suddenly entered a large buy to open position that exceeded the total combined existing open interest?

For example, suppose you are very bullish on a stock and you wanted to purchase the maximum amount of call options. Let's say the current total call open interest is 50,000 and you purchased 100,000 ...
4
votes
4answers
1k views

Options strategy - When stocks go opposite of your purchase?

I'm a bit new to options and would like to ask for someone's strategy opinion. Lets say that you buy a call at an expiration date 2 months or so from now, and in a few days you see the stock go flat ...
1
vote
4answers
2k views

If the put is more expensive than the call, what does it mean

If an At the money Put trades for much higher than the ATM call, can we say that people are expecting the stock to move down? After all, what else could be the reason if the put is more expensive ...
0
votes
2answers
308 views

Why doesn't cumulative call open interest and cumulative put open interest inform future stock directionality?

For example, how come the ratio of total puts and calls doesn't accurately inform of the stock's future movement?
3
votes
4answers
193 views

Is there an academic framework for deciding when to sell in-the-money call options?

I've been buying 1-year at-the-money call options on various stocks as a way to increase my leverage. I almost never regret selling them once they are up 40%. There are many times when they've been ...
1
vote
3answers
968 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
2answers
53 views

Impact on long call options

Anyone know the impact on long call options when a company reorganizes and issues new equity thereby diluting the shares? Are they unchanged or do my options increase proportionately with the dilution ...
0
votes
4answers
94 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 ...
2
votes
2answers
81 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 ...
1
vote
3answers
193 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 ...
0
votes
2answers
556 views

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

When choosing a call option, there are usually a number of strike prices that are in-the-money. My understanding is if a buyer chooses the lowest strike price, he will pay a higher premium but the ...
2
votes
1answer
132 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 ...
2
votes
3answers
128 views

Why would a long term option contract that's “in the money” trade at exactly the difference between strike and stock price?

A stock currently trades at $70.05 has the following option contract: 3/1/2019 $44 call The bid of this call is $26.05 which is the call's intrinsic value (the difference between $70.05 and $44.00)...
24
votes
4answers
7k 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?
5
votes
2answers
418 views

How does this actually work? I want to sell a call on poorly performing stock I own but the market thinks might increase slightly in price

I currently own a little over 500 shares of a stock which represents a hefty on-paper loss for me. I don't want to liquidate the position. I think that long term, the stock may come back up as in the ...
1
vote
2answers
229 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 ...
1
vote
1answer
224 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: ...
7
votes
4answers
2k 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?
2
votes
2answers
61 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 ...
12
votes
5answers
5k 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. ...
0
votes
3answers
1k 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 ...
1
vote
4answers
11k 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 ...
3
votes
6answers
5k 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 ...
5
votes
4answers
3k 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 ...
1
vote
2answers
163 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 ...
3
votes
4answers
626 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 ...
1
vote
1answer
162 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 ...
3
votes
2answers
4k views

How can I find ISIN numbers for stock options?

I currently use my bank for brokering services, as I don't have enough capital to justify going on my own. The bank told me that they need an ISIN if I want them to purchase stock (call)options for me....
1
vote
2answers
131 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
122 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
votes
1answer
312 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 ...
0
votes
2answers
89 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
vote
1answer
295 views

Which option is more expensive?

Consider two European put options, written on the same asset, with the same maturity, but different strike prices: K1< K2 Which option is more expensive? Then Answer the same question, but using ...
5
votes
3answers
798 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 ...