Questions tagged [option-strategies]

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25
votes
2answers
5k 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-...
6
votes
8answers
11k 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 ...
2
votes
2answers
427 views

How could I calculate the probability of getting wiped out?

Last year I ran a mildly stupid/naive options strategy. It involved picking 10-15 random companies, and then setting up put credit spreads on each one, expiring 1-2 weeks out. I prioritized high ...
0
votes
3answers
1k views

How to compute IVx (Implied volatility for a specific expiration) and the expected move with options?

By searching online, I have found three methods to compute the expected move of a stock based on option prices and implied volatilities: Method 1: Extract the price of a Straddle ATM of the front ...
13
votes
1answer
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 ...
5
votes
4answers
3k views

Why this strategy with options and zero risk is not possible?

I'm learning options and I've seen strategies with graphs like these: Why is not possible to combine a Butterfly with Straddle to get something like this (green is final result): I'm very new ...
5
votes
1answer
2k views

Can closing a covered call and opening a new covered call trigger a wash sale?

In Jan 2019, I bought 200 QQQ (ETF) at about $160 and also wrote two covered calls for June 2019 at 170 (higher than the last day price) netting a small premium. Now QQQ is at about 185 so it will be ...
3
votes
1answer
82 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 ...
1
vote
1answer
57 views

Call Debit Spread Pricing

I bought an AAPL debit spread today with expiration on 8/7. Here the details: Exp. 8/7 Sold AAPL $365 Call for $32.85 Bought AAPL $360 Call for $36.40 Max Profit = [(365 - 360) * 100] - 400 = $...
1
vote
1answer
7k views

Difference between naked put, covered put, protective put

If I buy a long put without holding the underlying, does it amount to a naked put? If I hold the underlying and buy a put, is that a covered put? Also if I hold the underlying and sell a put, is that ...
0
votes
3answers
2k views

Dividend arbitrage using in the money puts

I was looking at dividend arbitrage It seems all I need to do is find stocks with a nice dividend(e.g KO). Then find an in the money put where the time premium is less than the dividend to be paid. ...