Questions tagged [call-options]

A call option is a contract giving the owner the right, but not the obligation, to buy a specified amount of an underlying security at a pre-determined price within a specified time frame. Related tags are icall-options, options, options-assignment, option-exercise and should be used when appropriate.

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Options for dummies. Can you explain how puts & calls work, simply?

I never understood Puts or Calls. Could anybody explain it like I were a child?
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25 votes
7 answers
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Better terms to use to understand Puts and Calls for options trading

I've been trying to learn a little about options trading, specially puts and calls. The term options works well for my brain because someone is buying or selling the option to buy or sell something. ...
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24 votes
4 answers
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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?
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15 votes
4 answers
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Who buys these significantly out-of-money options? [duplicate]

The following is the screenshot of the NIFTY 50 option chain. It is taken from the following link. Why are these people buying these significantly out-of-the-money options? In this case, it's the ...
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14 votes
1 answer
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How is it possible that these deep ITM stock options on DISH went from 52,000 volume, 550 open bids, 550 open asks to being completely dead overnight?

I bought 16 years of historical hourly stock options data for my personal investment study to test how particular strategies may have played out over a long period of time. I'm looking at the data for ...
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13 votes
4 answers
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Why do people exercise call options at a loss?

I sold some call options for $2.55 premium at strike price of $130. At expiration, the market price was $130.55. I thought the option was not deep in the money and at a loss of $2, hence I didn't ...
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13 votes
5 answers
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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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12 votes
4 answers
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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 ...
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8 votes
2 answers
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How to salvage money from a call option that has lost value?

I bought a 12/06/19 $202.50 call option on Alibaba for $2.45. The call is currently trading for about 25 cents and I have lost almost all my money because BABA has dropped to about $194. Is there a ...
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8 votes
5 answers
12k 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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8 votes
2 answers
5k views

What are the odds of being assigned for a long dated in-the-money call option?

If I sell a 2-year future dated call option that is slightly in the money (For example if Citi today is $5.13, I sell a call option for strike price $5.00 at Jan 2013 - today is Jan 2011), what are ...
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8 votes
8 answers
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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: I have $20,000 in my brokerage account The price of a call option with $300 strike price is $5.00 (1 ...
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7 votes
8 answers
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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 ...
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7 votes
9 answers
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Why does a call option's price increase with higher volatility?

As per the Black-Scholes model, the value of a call option is directly proportional to the volatility. Without getting into the derivation of the BS equation, is it possible to intuitively understand ...
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7 votes
3 answers
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Am I understanding buying options on stock correctly?

I'm just wondering if I am understanding stock options correctly. Basically if I am watching stock XYZ. It's currently at $10 per share which I believe is low and should raise to 20 within 1 month. If ...
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7 votes
4 answers
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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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6 votes
2 answers
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Does exercising an option count as a gain?

I’ve always only sold options that I’ve had in the money. Of course sale of an option is income and will be taxed as such (assuming it’s been held <1 year). Now, for the first time, I’d like to ...
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6 votes
3 answers
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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 ...
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6 votes
2 answers
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Strategies to recover from a bad short-term call options purchase where the underlying dropped instead?

If I bought some short-term call options on an expectation that the underlying stock would go up, but instead the underlying stock declined some, shortly after my options purchase, what choices are ...
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6 votes
1 answer
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Options: Letting it expire or sell when profiting?

Do you let your options expire or would you sell it before you let it expire if you're profiting (meaning you're in the green - market is going towards the correct direction you anticipated). If you ...
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5 votes
4 answers
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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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5 votes
3 answers
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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 ...
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5 votes
2 answers
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Can the purchaser of a stock call option cancel the contract?

Let's assume there's a company, XYZ, trading at $11/share today. I purchase a call option @ $15 for $0.05. Do I need to keep funds in my account to satisfy the contract? I know my counter party ...
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  • 445
5 votes
2 answers
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Can a put option and call option be exercised for the same stock with different strike prices?

Refer to http://finance.yahoo.com/q/os?s=PEI&m=2011-10-21 If I were to sell a call @ 15 and sell a put @ 13, come October 21, is it possible for BOTH of the options sold to be exercised?
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5 votes
2 answers
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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 ...
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5 votes
1 answer
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Is the writer of a call ever required to surrender dividends to the call option buyer?

I was talking with an options trader that said he never writes calls on stocks that have dividends, because of various reasons. One of the reasons being that, under certain conditions, the writer of ...
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4 votes
3 answers
2k 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 ...
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4 votes
2 answers
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Can you buy an option and immediately exercise it? Options delays questions

Assuming American Options Can you buy a stock option and immediately exercise it - or are you only formally given control of the option at the end of the trading day? Would you be able to sell it ...
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4 votes
4 answers
1k views

What fundamental value do Options give the economy?

I had been wondering lately what the economic value that financial Options (Calls, Puts, American, Bermudan, etc) give to the economy is. In essence, what good do they give us, vs. simply trading the ...
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4 votes
1 answer
247 views

How can I sell INTEL covered calls?

As shown in this picture, how do I execute the strategy highlighted in yellow? I am based in the UK. Source: http://seekingalpha.com/article/274231-intel-dividend-champion-in-the-making (10/6/11)
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4 votes
2 answers
979 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....
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4 votes
1 answer
858 views

Does selling an OTM covered call affect the holding period of the underlying stock?

Given the following, ignoring commission, etc.: On 2019-03-16, XYZ is trading for $100.00. I purchase 1000 shares, for a cost of $100,000.00. On 2019-09-15, XYZ is trading for $150.00. I sell 10 XYZ $...
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3 votes
5 answers
4k 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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3 votes
3 answers
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Do stock option prices predicate the underlying stock's movement?

I am trying to understand if my thinking is correct or not. I am looking at a stock that is @ $10.00. When I look at the options on the stock $11, $12... calls are all down today and $11, $12... ...
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3 votes
3 answers
478 views

Option Value going lower even if the Price of the Underlying stock goes high

Trader bought a one month $150 strike CALL OPTION on stock XYZ that is trading for $150. He paid $500 for the contract. After two days, the stock's price is $160 but the trader sees that his contract ...
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3 votes
4 answers
425 views

Trying to get my head around how options work

A stock X is trading at $215. I bought a put at a strike price $195 for $2.55 premium(paid $255) expiring June 7. Today the stock is down by $15 to $200. However, the price of my put is reduced from $...
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3 votes
3 answers
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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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3 votes
2 answers
954 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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3 votes
3 answers
2k views

What is the best way to make a bet that a certain stock will go up in the medium term?

If I want to make a $1000 bet that, say, a share of AAPL will be $1000 in a year's time, what's the best way to do that? AAPL is over $600 today, so with my $1000 I can only afford to buy one share. ...
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3 votes
3 answers
319 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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3 votes
1 answer
946 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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3 votes
3 answers
572 views

Options Trading: How to lock in unrealized gains?

I've been learning about options trading, but the one thing I haven't explicitly read anywhere is how you actually lock in (i.e. cash out/collect earnings) from options trading. Take the following ...
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3 votes
3 answers
618 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 ...
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3 votes
2 answers
243 views

Buying & Selling Call Options

So, I understand that if I write a call option and someone decides to exercise it before it expires, I agree to sell them the stock for the listed price on the option. I guess my confusion is, if I ...
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  • 141
3 votes
1 answer
726 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 ...
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3 votes
4 answers
217 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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3 votes
1 answer
297 views

Prices increases leading to call debit spread loss

I recently entered a debit call spread on Apple and I noticed the price of the sold option appreciated at a faster rate than the bought option resulting in a loss even though the stock moved in my ...
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3 votes
1 answer
642 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.
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3 votes
1 answer
7k views

Negative Balance from Automatic Options Exercise. What to do?

I have an account with ShareBuilder and recently purchased some call options, which ended up deep ITM (in the money). I attempted to close the options too close to when the market was about to close (...
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3 votes
1 answer
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Who are the non-speculative buyers of futures options?

I am trying to understand who would be a non-speculative buyer of options contracts on futures. There are a plenty of descriptions of how options work online, but mostly they omit this crucial part of ...
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