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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.

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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 ...
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4answers
3k 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?
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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 ...
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1answer
654 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 ...
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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 ...
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2answers
91 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 ...
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1answer
103 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, ...
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1answer
70 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
244 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 ...
2
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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 ...
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2answers
2k 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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1answer
402 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
954 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 ...
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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 ...
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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 $...
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3answers
1k 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
89 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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4answers
1k views

Why naked call writing is risky compare to Covered call?

I know that with a covered call you own the underlying and sell a call and with a naked call you don't own the underlying. Either way, if the underlying finishes in-the-money, you are assigned and ...
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1answer
55 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?...
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1answer
79 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
232 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 ...
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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....
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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 ...
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3answers
1k views

Why buy a vertical spread if I could instead buy a naked call?

If I believe a stock will go up, say from a price of $100, and I wish to execute an options strategy that would make me money if the stock were to rise, why would I want to setup a vertical spread ...
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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 ...
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1answer
497 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 ...
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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 ...
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3answers
495 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 ...
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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 ...
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3answers
111 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. ...
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1answer
157 views

How to exercise options when you they're worth more money than you have? [duplicate]

This is a hypothetical situation, I'm not actually in this position. I'm also an amateur with this, so correct me if I make any mistakes. Let's say a stock is $100. You buy $4,000 worth of $0.50 call ...
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2answers
48 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 ...
2
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2answers
158 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 ...
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5answers
5k 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 normal ...
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 ...
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1answer
3k views

What is the maximum number of options I can buy if the price is $0.01?

In options trading, the lowest price for one call option can be as low as $0.01, for example for one contract which expires in a year. My question is what is the maximum number of options I can buy ...
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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 ...
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0answers
31 views

Why is this option trade considered over the counter

In this article the author says: Since June 24, crude prices halved while CVX has dropped only 20%. SPY has risen slightly less than 3% during that time period. What’s a good options ...
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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 ...
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1answer
59 views

Why the call option premium sometimes does not decrease the further out of money we go

Usually when you have an option change, the further OTM you go, the premium drops for the same expiry date. But if we look at the Mar 2015 Call and Put option chains for VIXY, it seems this is not ...
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2answers
222 views

Option settlement for calendar spreads

Hypothetical: let's say it's Jan 17, 2015 and AAPL is at 100. My portfolio contains: Long 1 Jan 23, 2017 Call Option for AAPL at 60 Short 1 Jan 17, 2015 Call Option for AAPL at 90 20,000 USD cash ...
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2answers
622 views

How to correctly track a covered call write (sell to open) in double-entry accounting?

I recently started using gnucash for personal accounting, but I guess this question doesn't depend on the software. I sold a covered call, and I'm not sure how to keep track of that in the double-...
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1answer
264 views

Choosing a strike price when you sell a short combo

Often different stocks that I want to short are not on my broker's "easy-to-borrow" list, so they are unavailable for shorting. A couple weeks ago I got serious about option trading and I found out ...
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2answers
1k views

How to sell a worthless option

I have a call option that will expire as worthless in January but I'd like to sell it now and realize the loss this year to lower this year's capital gains taxes. I would be happy to dump it at $0.00 ...
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1answer
258 views

“In-the-Money” vs “Out-of-the-Money” Call Options

This is a homework question, but can explain to me how to determine "in-the-money" vs "out-of-the-money" call options based on the table below? The image above is a newspaper style quote. The first 3 ...
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2answers
1k views

Future price == strike price in the future contract?

Assume a future contract specifies that the holder of the contract will need to buy corn from XYZ farm at £100 per tonne, 1 tonne. So total deal value when realizing this contract is £100. We all ...
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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 ...
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1answer
3k views

Why out of money options show no bid price but a valid ask price

Looking at the option chain for SPY I see that a lot of the out of the money calls are showing Bid as N/A. What is the reason? Nobody wants to buy out of the money calls because expiration is ...
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2answers
4k views

Why does shorting a call option have potential for unlimited loss?

Referring to http://en.wikipedia.org/wiki/Option_(finance), for a short call: If the stock price increases over the exercise price by more than the amount of the premium, the short will lose ...
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1answer
249 views

What is the probabiltiy of being assigned if the call expires in the money

If I sell a call option and at expiry, the call is in the money, is it guaranteed that I will be assigned and will need to deliver the underlying? What is the probability of assignment/ My question ...