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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208 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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49 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
109 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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1answer
110 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
65 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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4k 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
51 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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1answer
218 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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1answer
108 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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58 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
66 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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134 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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836 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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211 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
89 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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1answer
510 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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2k 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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1answer
11k 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. However,...
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1answer
953 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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297 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
52 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
246 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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535 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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227 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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221 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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3answers
224 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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491 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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1answer
707 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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3answers
263 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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794 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
3k 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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115 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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1answer
39 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
347 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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1answer
1k 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
690 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
141 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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683 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?
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122 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 ...
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2answers
441 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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3answers
183 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)...
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1answer
5k 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 ...
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12k 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?
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59 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
523 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
513 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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456 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 ...
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1answer
5k 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 ...
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2answers
68 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 ...
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1answer
238 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 ...