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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38 views

What is the reason behind the trader bought OTM option?

The following is the option alert for UBER stock. I interpret this as the trader bought 19 CALL option contracts at the strike price of $31. He should have chosen the strike price of $29 or $30. I ...
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1answer
32 views

What do these Option Alerts mean?

What do these Option Alerts mean? Uber Technologies Option Alert: Jan 17 $31 Calls Sweep (19) near the Ask: 1000 @ $0.6 vs 5648 OI; Earnings 2/4 Before Open [est] Ref=$28.695 Slack Technologies ...
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4answers
320 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
99 views

Buying put options on the day of expiry and the result

This article covers a trade of $270 Strike CALL expiring on December 6th. My questions are: Can you buy a put or a call on the day of expiration? What will be this trader's speculation? The US Jobs ...
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1answer
91 views

Selling PUT and CALL

The Option Chain of a stock is given below. The stock price now is $22.50. If I sell a $21 put, I'll receive a premium of 15 cents and I will be obligated to buy the stock at $21 if it is below $21 ...
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25 views

What option exit strategies and history can be used if I want to take the profit before the expiration?

I created a P/L graph for 2 CALL OPTION contracts XYZ Jan 15 2021 120 Call. I want to take some profit before the expiration of January 15, 2021. What technical data that I can use to figure out a ...
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1answer
20 views

Strangle Vs Long Call LEAPS for a scenario

The stock price of a stock is now $70. The trader is speculating that the stock price can go to $120, but then there will be pull back to $50. It can happen in the next one year. Is it a good ...
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1answer
46 views

Why is this option's price so out of line?

This option's price seems completely insane: TCF Jan 17 2020 22.5 Call (TCF200117C00022500) Why is this option's price so far out?
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48 views

What is the Profit for a scenario on the day before expiration?

I have 1 contract of a CALL OPTION of a XYZ stock. The strike price is $155. The purchase price is $15. The Expiration is Jan 3 2020. The current price of the stock is $161. I paid $1515 for owning ...
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2answers
3k views

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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1answer
76 views

Finding the Profit/Loss for different scenarios for a call option of a XYZ stock

I have 1 contract of a CALL OPTION of a XYZ stock. The strike price is $155. The purchase price is $15. The Expiration is Jan 3 2020. The current price of the stock is $161. I paid $1515 for owning ...
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2answers
73 views

How Implied Volatility affect Options Pricing

TSLA between 23 and 24 October 2019 had their earnings report. TSLA mark price on 23 October was 252$. On 24 October, half an hour after market open reached 297$. as we saw around 44$ push. if ...
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65 views

How to reduce margin requirement when shorting calls?

When I naked-call (short) cash-settlement options, like VIX, the margin requirement is very high. I tried some spread strategies to protect (e.g., buy same-expiration call at a higher strike), but ...
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2answers
54 views

Premium to price ratio - Seemingly simple option research not so much

I would like to identify call options with weekly expiration dates that pay the most premiums relative to the underlying stock price. For example: As of 11/12/2019, TSLA has a price of ~350 per ...
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1answer
58 views

How do I know what option on a particular stock X will move the most?

Say for instance I have a view that MSFT in the coming 3 months is going to come out with a big upgrade to their full year guidance. Let's assume in the event that this happens the stock goes up a lot ...
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2answers
298 views

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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2answers
200 views

Can a broker buy shares to cover naked calls without notifying me?

I sold some in-the-money naked calls, and found out the next day that the broker bought the underlying shares to cover the calls. They claimed that the underlying is hard-to-borrow and since the ...
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1answer
57 views

What is the effect of a short stock position on the value of an option?

I'm reading the book "Option Volatility and Pricing" by Natenberg and there is a paragraph I'm having trouble understanding. Chapter 7 (Risk Measurement 1), Page 98, Paragraph 2: The value of a ...
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4answers
14k 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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8answers
7k 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 ...
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1answer
123 views

How does this “cont callable,” “make whole calls” bond work?

I was looking at this bond on TD Ameritrade: This is a callable bond, so I'm wondering how that works, exactly. TD Ameritrade says that this bond is "cont callable," which I assume is an ...
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1answer
848 views

Deep in the money Covered Calls with high premiums

Take a look at following option chain, it's for some company in Indian markets, I intend to do a covered call on the stock but I would want a little extra downside protection at the cost of little ...
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1answer
280 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
517 views

Selling options below bid on Robinhood

If you sell an option for cheaper than what is someone willing to pay, does Robinhood sell it for the best price or for the price you chose to sell it? I'm trying to figure out if I can do stop loss ...
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5answers
2k 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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6answers
6k 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: I have $20,000 in my brokerage account The price of the $300 call is $5.00 (1 contract = 100 shares) I buy ...
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8answers
23k views

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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1answer
2k views

Robinhood doesn't allow you to exercise call options in the app?

On the Robinhood website, https://support.robinhood.com/hc/en-us/articles/360001331403, the following is written about exercising stock options: Can I exercise my call before expiration? Yes. ...
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1answer
338 views

Difference between deltas of American vs European Call options

Is there a difference in the value of Delta of American and European options with the same underlying asset price, strike price, time to maturity? Also, is there any way to determine the price of an ...
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2answers
171 views

How do I calculate the return on my stock _call_ option, similar to my _put_ example?

I'm trying to figure out the effective percentage return when I write ("sell to open") a stock call option. I think I've figured it out for put options. Consider this put example I think XYZ stock ...
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1answer
684 views

Options basics: How to realize profit from a long call position

I'm studying the basics of options trading and just read a 'crash course' book where the author states the following: ...you won't walk away from a call option with cash in hand. The profit we ...
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4answers
252 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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1answer
44 views

Currency option case

I am a bit lost with understanding the naming used for holding positions in the currency options and their payoffs. If I want to buy the European option with an amount of x USD (EUR put/ USD call), ...
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3answers
199 views

How to buy a contract for S&P 500 index?

I am researching writing covered calls on S&P500 index. So in order to sell covered call I need to buy a contract for S&P500 index. I've never traded indexes. What exactly I will be buying (...
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2answers
167 views

Delta of a Vertical Spread | Slower than delta of long option?

People often prefer to trade options spreads rather than buying options, since those reduce your cost and have a defined profit and loss but what is the probability of success of a spread? For example ...
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1answer
415 views

Long term option sell short term options against it

Company A is currently trading at $100. I bought 10 calls at a $110 strike price which expire in six months. What would be the best strategy (risk to reward) to buy or sell monthly options against ...
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2answers
157 views

Option trading for dummies

If I buy a $200 call option for $22 ($0.22) that expires in 3 weeks, with a current share price of $140, can I sell the option two weeks from now if the share price has reached $180? I'm asking ...
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3answers
194 views

The math of this Investopedia article

I'm a little confused on how this article comes up with $650 instead of $700. From Investopedia. Consider the following example: XYZ is currently trading at $99.00 You own one XYZ Oct 90 ...
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1answer
505 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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3answers
205 views

Why would anyone ever buy these call options?

I'm starting to learn the ins-and-outs of options. For the time being, I'm only interested in selling call options of index funds. Browsing through the available options in Robinhood for the ETF IVV (...
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4answers
207 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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3answers
169 views

Starting with options trading

I am a regular trader with stocks but I am a complete beginner with options. I am referring to a few online resources like here and here However, I have a few questions. Say I call a stock at $50 ...
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2answers
112 views

What kind of stock option (European, American, exotic) is more popular? [closed]

I would like to know whether investors tend to prefer European, American, or exotic (aggregation of several options) stock options, either put or call. I also would like to get an idea of the relative ...
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3answers
295 views

Why not sell a call option with strike price below stock price?

Learning a bit about options. Can anyone explain to me why this is a bad idea or wouldn't work? Assuming example stock XYX with current price of $5.10, with calls selling for $.50 at a strike price ...
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1answer
840 views

“Break even” price on call options is lower than current stock price?

I am using the Robinhood app and see call options with breakeven prices below the current stock price. Is there a reason why you wouldn't just buy this option and then sell it off immediately ...
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1answer
31 views

Present value of exercise price & call-put parity

Call-put parity looks as follows: [value of call] + [PV of exercise price] = [value of put] + [share price] *from Brealey, Myers, Allen "Principles of corporate finance" Take an example: share ...
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1answer
180 views

Approach to roll down a Covered Call

If I sell a covered call and the stock declines some time before expiry, what would be a strategic approach to roll down the call to protect the downside, or are there any other approach to do it? Do ...
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2answers
116 views

Understanding the technicalities in options (put example)

My goal is to use options on a speculations level. I'm a bit perplexed with what I see on the broker account and thought this will be a good place to post my questions. So, here a fake-scenario (...
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2answers
187 views

does naked call option assignment result in stock borrowing fees?

If I write a naked call option which gets exercised early, will I have a chance to purchase the stock to cover the call or will I already owe a stock borrow fee by the time I am notified of the ...
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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 ...