Questions tagged [option-strategies]
The option-strategies tag has no usage guidance.
176
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Can you effectively reduce the cost of a long call on an index with a synthetic long and married put (e.g. replicate an XSP call using SPX options)?
Imagine you want to use periodic cashflows to purchase deep-in-the-money LEAPS (>1yr expiration calls) on SPX, but the size of the cashflows are too small to do so consistently (the cost of such a ...
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162
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How to properly hedge indices futures NQ by selling leveraged index options TQQQ or SQQQ?
Is there a formal futures NQ vs TQQQ options contracts hedging ratio calculation/strategy to tap on the fast decaying value of weekly expiry TQQQ options thereby creating an asymmetric risk-reward ...
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68
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confusion about gamma and gamma portfolios
Generally, a long gamma portfolio will make money when the underlying:
(a) out-realizes the historical volatility (measured close to close)
(b) out-realizes the implied volatility (more than making ...
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135
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IV applied to Buying Vs. Selling Option Contracts!
Is low IV (Implied Volatility) good for selling or buying options?
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1
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36
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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 ...
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1
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88
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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 ...
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1
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157
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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 ...
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1
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86
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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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130
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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 ...
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108
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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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242
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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 ...
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60
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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)...
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76
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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 ...
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1
answer
28
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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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41
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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 ...
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65
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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 ...
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3
answers
126
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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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127
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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 ...
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106
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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 ...
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150
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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 = ...
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74
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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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148
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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 @ ...
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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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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 ?
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33
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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
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102
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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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148
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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 ?
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114
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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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74
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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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105
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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 ...
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141
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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,...
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173
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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 ...
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263
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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 ...
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257
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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 ...
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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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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 ...
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471
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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 ...
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3
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160
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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 ...
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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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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?
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2
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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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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 ...
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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 ...
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135
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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 ...
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4
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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 ...
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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 ...
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2
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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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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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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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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 ...
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