Questions tagged [option-strategies]

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-1 votes
3 answers
102 views

IV applied to Buying Vs. Selling Option Contracts!

Is low IV (Implied Volatility) good for selling or buying options?
0 votes
1 answer
32 views

How to Roll Put Options (Buy to open)? (Bought to Open)

I have a put option that I bought to open but the market has moved against me. So I'm looking for a way out of the contract other than taking a huge loss. I want to know my options for rolling them ...
0 votes
1 answer
32 views

Bought Put Options that are getting close to Expiration

If I let my option expire ITM (Bought Put Option) I will then own those shares. My account won't allow me to do covered calls or covered puts so I can't leverage against them. What are my other ...
0 votes
1 answer
58 views

How to calculate break even price on delta hedged portfolio?

The underlying currently trades at 10. Suppose you have a portfolio consisting of: 1 Call at strike 11 with premium 0.4 A short position of 25 shares Calculate the break even prices of this ...
0 votes
1 answer
84 views

What's the negative about buying contracts 1 month out when scalping options? (Is it buying same day or 2-3 day contracts are way cheaper?)

What's the negative about buying contracts 1 month out when scalping options? (Is it buying same day or 2-3 day contracts are way cheaper?) I don't want Theta to negatively affect my gains.
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0 votes
1 answer
75 views

Best approach to select strike prices for an Iron Condor?

Options beginner here. I'm aware of three popular ways to select strike prices for Iron Condor. Select strikes such that they are equidistant from the CMP. Select strikes such that the they form a ...
3 votes
0 answers
87 views

How can I bet against a particular stock in relation to the market?

I’ve heard people doing spread trades when they think one stock will do better/worse in comparison to another stock or index. I’m looking for details on exactly how this is done. Is there a particular ...
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0 votes
1 answer
95 views

Do I need to worry about dividends when trading credit spreads?

I trade in the options market, mostly with vertical credit spreads. If one of my underlyings has a dividend coming up, does that affect my holdings? My guess is that the short and long position would ...
0 votes
3 answers
60 views

Maximum credit exposure to Over the counter straddle

A trader purchases a six month over-the-counter straddle on stock A for a 1 Million premium from a counterparty. The maximum credit exposure over the life of the trade is: 1)less than 1 Million. 2)...
0 votes
1 answer
66 views

Option strategy, Black, Scholes and Merton Model and Lognormal distribution

The Black, Scholes and Merton option pricing model assumes the stock price changes are lognormally distributed. Then, How to show graphically How this distribution changes when 1a)an investor or/and ...
0 votes
1 answer
28 views

Making a long put into a long put spread

Let's say I have a long put and it's Friday. I still think it has good potential to move down but I just want to be protected over the weekend in case the trade goes against me drastically because of ...
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0 votes
1 answer
39 views

Long ratio put spread versus call strategy for stock of ABC company

Part(1) Long ratio put spread versus call strategy for ABC company Current market price:$639, view: moderately bearish Buy 2 February 630 Puts@ 35.00 Sell 1 February 660 Put@ 52.00 Sell 2 February 690 ...
0 votes
1 answer
41 views

Delta hedging of stock portfolio using options

In the aforesaid delta hedging of stock position, how was the delta of long stock computed by author ? In my opinion, total long position of 500 shares divided by the market lot of one put option ...
0 votes
3 answers
103 views

How far from the strike price is an option contract being exercised?

Say I sold a naked put at $30 strike price for an option premium of $1. Would the broker assign 100shares instantly to me when the stock price drops to $30(approximately) or only when price is below $...
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0 votes
1 answer
94 views

Option pricing model: Black-Scholes-Merton model

Suppose, that a stock is priced at $ 400 and a volatility of 0.39. I buy a call option with an exercise price of $ 400 that expires in 3 months. The risk-free rate is 8%. Now, The theoretical value ...
0 votes
1 answer
77 views

Can both call and put option of the same strike price and same asset expire to zero on expiry date?

Suppose we are trading the call and put options for an underlying asset such as crude oil at a strike price of 1000. Will there be any scenario in which both the call option of strike price 1000 and ...
1 vote
1 answer
120 views

How Do I Construct a Long Short Portfolio Using Only Options?

I'm confused on how to construct a long short portfolio using strictly options. If I wanted to hedge stock, I would long stock A and short stock B by making sure that the quantity * price of A = ...
-1 votes
1 answer
73 views

When to sell put option

Buying a put option happens when market is going down. Correct. If that is true then when should one sell put option ?
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0 votes
1 answer
79 views

How does expiration/assignment work in synthetic covered call

What happens if I let a short call expire worthless on a synthetic long stock I've purchased. Here's my scenario. Bought a CALL @ 870 and sold a PUT @ 870 both expiring in 177 days. Also sold a CALL @ ...
1 vote
1 answer
34 views

What does adding/removing stocks from optionable to non optionable and weekly to only regular, depend on?

Does a company require that its stock offer options as well as optionable/weekly or not optionable/regular? Or is it the OCC that controls this (depending on option trading volume?). How often does ...
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0 votes
1 answer
44 views

When I buy a option spread with different calendar dates, should I close every leg manualy?

When I buy a option spread with different calendar dates (september, 10-17-24, october, 1), should I close every leg manualy or they will be closed automatically even if they expired ITM ?
  • 897
0 votes
1 answer
30 views

What are the different methods to manage a Call/Put Butterfly

I'm learning options and understand that there are different method to manage trades that go wrong. In case of the Call/Put butterfly whenever the price goes above upper breakeven or goes below lower ...
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2 votes
2 answers
80 views

Option chain with nil bid quantity and price

Let's assume I bought a call option ABC CE @.50 and now its value is @.10. There is no bid price or bid quantity. Am I able to sell the option at @.10 anyway?
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3 votes
2 answers
134 views

Significance of the word iron in option strategies

Why is the word iron used in some of the option strategies, like iron butterfly or iron condor ?
  • 173
0 votes
2 answers
92 views

Managing Long Straddle

Am a beginner in option trading. Recently started learning option strategies. The long straddle looked particularly appealing. However to make a profit the underlying needs to move, lets say around 2%....
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0 votes
0 answers
73 views

How do "Crabs" make money exactly? [duplicate]

So again i'm used to Crypto Currencies, and since im stupid i learn most things from threads from /biz/ (fortunately i still take decisions based on myself), i've seen plenty on lingo like a bull ...
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1 vote
1 answer
100 views

Are future options per 100 unit?

In futures (for commodities, indices, fx...); Is 1 option for 100 future contracts ? For example: If I want to make a covered call option for Gold and for micro Dow jones future, How much should I buy ...
  • 897
0 votes
2 answers
138 views

Option Strategy - Put Sell goes wrong [closed]

I'm bit new on Option Trading and want to ask your opinion/strategy on certain situation. Say, the stock price is $110 and I sold a Put at a strike price $95 and expiry after 60days. After 3 or 4 days,...
0 votes
1 answer
150 views

Iron condor - can the described scenario happen?

Options beginner here. Cannot wrap my head around this. Say I’m trading a long iron condor and the call spread ends up in the money on expiration. Now I can exercise the long call. So should I wait ...
0 votes
2 answers
196 views

How do I find the probability of a sold put being assigned?

I read where if you sell a put you should make sure that the probability of being put the stock is no more than 30%. This is assuming of course that you don't really want to own the stock. How do I ...
1 vote
2 answers
205 views

Options trading: buy/sell to open/close terminology

I want to buy put options as I believe the price of the underlying asset is going down. In the linked video here at around 1:10 there is a bit saying that for short positions, you 'sell to open' to ...
3 votes
1 answer
100 views

For an individual brokerage account user, what is the cheapest way to take a short position in a stock?

As far as I know, if I want to sell short, say, $100 worth of stock I need to post $150 in cash collateral and pay some fees each day. Another way is to buy a put option. In that case, I need to pay ...
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13 votes
1 answer
32k views

Closing Shorted Positions via Short Ladder Attacks

From my understanding in a short ladder attack investors bid lower and lower prices to drive down the stock value. I assume in many cases this will scare retail investors into selling further ...
1 vote
1 answer
428 views

Why roll a credit spread out and keep the same strike price?

I’m confused. Why would you ever buy the same strike price when rolling out a bull put spread if the price has moved against you? If the price ever falls below the price you sold the put for, you can ...
1 vote
3 answers
153 views

Trading with options and turn in profits

Yesterday I read an article about how someone was able to turn $ 200 into $ 113,000 in just one day by buying call options on a particular stock. The article also showed a screenshot which appears to ...
2 votes
1 answer
49 views

Should the change in price of a synthetic (long call + short put) ever be different from the change in price of the underlying?

On my paper brokerage account, I can see that this appears to not hold true ... Daily P&L Financial Instrument Position Last Market Value Prior Close Change (Last - Prior Close) 310 ...
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0 votes
2 answers
69 views

Transfer money out of IRA using stock options?

Is there a stock option strategy that allows one to transfer money out of an IRA brokerage account into a non-IRA brokerage account without incurring penalty?
1 vote
2 answers
81 views

What are the risks involved in buying a synthetic long (long call short put) and letting it expire compared to buying the underlying?

As an EU resident, I am not allowed to purchase US-based ETFs. However, I am allowed to trade in options on such ETFs and exercise them. One way of obtaining the stocks I would want to purchase is by ...
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1 vote
1 answer
41 views

Implied Volatility, % Change in the Option Chain

The following is the Options Chain of CRM (Salesforce) for March 19, 2021. A few questions from the chart: What does the % Change mean in this chart? What does the Volume mean? At the $300 strike, I ...
0 votes
2 answers
148 views

How are put and call options reported wrt taxes?

My broker tells me that option transactions are reported for tax purposes as two independent transactions. That is, the net profit or loss is not reported. Instead, the receipts from the sale of the ...
3 votes
1 answer
125 views

Is short term capital loss worth more than long term capital loss?

Let's say someone has already realized a lot in short term and long term capital gains for a given year. And the same person has also unrealized short term capital loss that will turn into unrealized ...
2 votes
4 answers
1k views

What's to stop me from selling Iron Condors one day before expiration?

AAPL is currently trading at ~115. I can construct the following Iron Condor that expires tomorrow. It has close to a 1:1 R/R ratio: BUY APPL 121 CALL SELL AAPL 120 CALL SELL AAPL 110 PUT BUY AAPL ...
0 votes
1 answer
60 views

What Strategy are these option writers following?

This is the option chain from NIFTY Index about a month from expiry. Apart from speculation what strategy could these option writers be following by writing in the money calls at 10000 or puts at ...
2 votes
2 answers
198 views

Is it important to understand option pricing models before trading options?

Options seem to be one of the most complex financial instruments generally available to retail investors. The common advice given to beginners (at least on this site) is that beginners "must ...
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1 vote
1 answer
187 views

Options strategy that profits from outperformance (or underperformance) relative to a stock index

If I expect a stock to go down, I could buy put options. Conversely, if I expect a stock to go up, I could buy call options. If I expect a stock to underperform the market (but not necessarily go down)...
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25 votes
2 answers
6k views

How do I bet that a stock price will not move?

If I believe a stock will go up, I buy the stock. If I believe a stock will go down, I short the stock. If I believe a stock will neither go up nor down, what do I do? How do I profit from a non-...
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6 votes
3 answers
1k views

How do I replicate a shorted stock and protective call option using options only?

Suppose a stock is currently at $100. I construct the following portfolio: Short-sell 100 shares at $100 Long a call option — strike price: $105 (protective call) The protective call option serves ...
  • 16.6k
3 votes
1 answer
309 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 ...
1 vote
2 answers
102 views

Does increasing value of a still-out-of-the-money option that you wrote (covered) pose a risk to you?

I am a US citizen living in the US. I want to write covered call options to receive premiums. If implied volatility increases and/or the price of the underlying rises, an out-of-the-money call can ...
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2 votes
2 answers
3k views

Put option lost value when stock price dropped?

I had purchased 3 puts of MNOV yesterday with a strike price of 7.50 when the stock was worth around $11 and it raised as high as $13+ The stock price had dropped as low as $7.15 and is currently ...
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