Questions tagged [options]

This tag is to be used for any question on Options, A more specific tag [put-options, call-options, options-assignment, option-exercise] should be used when appropriate.

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13 views

Understanding options by example

mostly I trade crypto, so wanted to dig into btc option trading, can u help? I've read some general stuff about options I want to trade it here on binance: https://voptions.binance.com/en but got a ...
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How OPTIONS are settled can be an eye opener and I hope I can get some answers

I had a 2 SHORT QS Option at 75 which was exercised against me on the 23 Dec 00.45 AM and I later exercised my 2 LONG QS Option at 70 on 23 Dec 9.31 AM. The broker charged me Borrow Fee for 24-27 Dec ...
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1answer
102 views

As a put option buyer, do I potentially suffer a loss higher than the premium if I forgot to close the option when it is in the money

Many sources only mention that if the option expires worthless, I will lose the premium as the maximum loss. But in reality, I can also lose money higher than the max loss even if my put option is in ...
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Non-US citizen/resident trying to begin trading options and futures

I'm from Brazil and I already trade shares, options and futures here for ~5 years in the Brazilian stock market. I began trading shares in the US stock market a few months ago using the Passfolio ...
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1answer
78 views

Option trading volume inconsistencies

May I ask for your opinion on option trading volume numbers? A recent example might be DNN (Denison), a call option,expiration Mar 19, strike $2.50 Yahoo says in the option chart that the volumes were ...
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2answers
104 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 ...
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1answer
66 views

Withdraw a covered call premium right away

Let's say that I have $50k in my brokerage account. My broker will let me buy double my account's value on margin. I can buy 100 shares of TSLA at $820 per share and then sell a one year covered call ...
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1answer
69 views

Selling a cash secured in-the-money put

I sold a cash secured put for XYZ stock. It is Aug 20, 2021 expiry for $34 Strike Price. The stock was trading at $31.60 when I sold the PUT. I have received $1K premium for selling that option. If ...
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1answer
31 views

Price lands between Spread Strike on Expiration

Imagine this setup: Sell put strike $10 Buy put strike $9 At expiration, the price is at 9.5 which should cause you to be assigned but your bought put won't execute. However, if you're doing this on ...
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1answer
65 views

Why are Short Put option strategy losses said to be unlimited when they are limited by fact that stocks don't fall below zero?

This is really more a question about terminology. In many articles describing synthetic long stock options strategy, losses (on the Short Put leg of the trade) are noted as being "unlimited"....
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Covered calls - can anyone confirm if my understanding is correct?

I hope that it's appropriate to ask this kind of question here and I'm not sure how to formulate it. I have a specific (real) example that I'd like to outline to see if I understand this correctly. ...
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Why do you not exercise call option, but exercise put?

I can understand the common explanation why you don't exercise american call option on non-dividend paying stock. You can sell the option instead of exercising because price is always greater than ...
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2k views

Who provides the shares for exercising a put option?

I am trying to get into investing and have some questions about options. If I buy a put option (which would be an option to sell stocks as far as I understood), who will provide the stocks to sell if ...
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1answer
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Buying To Cover And Protecting Profits from Short Sell

I sold covered call options, and I would like to buy to cover when the market opens on Monday. For this particular instrument, trading volume is a bit thin, and I would like to "hide" my ...
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Option greeks and over the counter options

A)A call option struck at-the-money typically has a delta of ______ and relatively ______ gamma. 1)0.5...high 2)0.75...high 3)0.5...low 4)0...high B)Trader A purchased a 1-year over-the-counter put ...
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35 views

when do you decide if to execute an option?

I own a call option that expires on Friday. When do I decide whether to execute the option? The Saturday after?
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3answers
90 views

Does exercising an option move the price?

This is a follow up question to this one. Summary: There are deep in-the-money puts at strikes of $800 being traded for an instrument whose price is much below that (in the ballpark of $225 at the ...
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1answer
163 views

Why doesn't this options investing strategy work?

I am trying to understand a certain investing strategy involving options. In the example I'm looking at, it seems one can obtain a stock for less than its market price, so there must be something I am ...
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1answer
141 views

Wheel strategy (cash covered puts and covered calls) for an annual income

I'm curious if there's anyone selling cash covered puts and covered calls for income. If so, what is your monthly gross return in percent and how long have you been doing it? I'm considering selling ...
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3answers
47 views

Do taxes on hedging apply between a tax sheltered and non-sheltered account?

I have been reading that there are various tax laws that prevent one from doing things like locking in one's short term gains on a stock by purchasing (or selling) options, or resetting one's cost ...
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3answers
177 views

What is the gambling difference between sports betting and trading stock market derivatives based on indices?

What is the practical difference in terms of gambling between wagering on the future score of a sporting match and wagering on stock market derivatives based on indices, such as the future value of ...
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232 views

GameStop Short Squeeze - a moral component? [closed]

From the headline coverage, the options trading is made out to be a Main Street vs Wall Street phenomenon: or even sensationalized to average Joe vs banksters. But it seems that the hedge fund keeps a ...
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1answer
273 views

Did GME short sellers unwind by buying back shares, or in some other way?

A few weeks ago, short interest in GameStop (GME) was around 140%. Float is around 47 million, so total tradeable shares would have been about 113 million. According to reporting I have seen, it has ...
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5k views

Deep in the money put options

I'm trying to make sense of this option: Type: put Expiry: 2021-02-05 (= this week's Friday) Bid: 580.4 Ask: 584.9 Contract size: 100 Strike: 800 The underlying's last price is $225. Buying this put ...
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3answers
49 views

Would my shares be sold if the price expired at above my call spread?

I own 100 shares of XYZ. I sold a call option on XYZ at a strike of $100. I bought a call option on XYZ at a strike of $110. The price of XYZ expired at $120. Will my 100 XYZ shares be sold and a ...
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1answer
147 views

Please explain this put option

Earlier today, I purchased 2 put options on GME. The opening price was around $295. The price dropped $30 in 45 minutes to below $265. Why am I not making any money? I looked at all of the put option ...
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Are there any major advantages of selling put options with a longer expiry date?

If I wish to sell put options to collect the premium, are there advantages of setting a time to expiry of 56 days as opposed to 30 days? Does this lower the risk? Here I am considering American style ...
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3answers
43 views

When exercising a leap call option, do you keep the premium?

let's say that 1 stock of XYZ currently is 50$. I bought leap call option for XYZ with strike price 50$ and premium 10$. When exp date will come and I will exercise my call option. How much will I pay ...
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1answer
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Protect “Riesterrente”-retirement account from downside of liquidation

My mom has a german retirement portfolio called "Riester-Rente". Portfolio is mix of bonds and an international fund (DE0008491051). Long explanation: As part of legal compliance, they need ...
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42 views

Who are the market makers in options trading?

Can you give some examples? Are hedge funds also market makers?
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1answer
39 views

Do the people that sold naked calls that expire in the money have to settle up at the closing price on the day of expiry?

If a naked call expires Friday does the issuer of that call have to pay the 4:00 Friday price for the 100 shares or can they wait for a better price after hours, or the next day before settling?
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1answer
956 views

Is a Low Orbit Gamma Cannon illegal?

The recent/current GameStop situation with r/WSB vs Wall Street reminds me in some ways of the Low Orbit Ion Cannon, a tool in the 2000s that 4chan/Anonymous used to DDoS sites using the home ...
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1answer
72 views

Can you sell out-of-the-money option on last day of expiration?

I have a $500C Jan 29 GME option expiring tomorrow. I bought it when this contract was at $9.30. If the stock goes to say $400 or $450 tomorrow and the stock price is still under my strike price of $...
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480 views

How can I be short volatility on a stock without getting exposed to moves in the underlying?

Given the current high volatility situation I'd like to benefit by deploying my mostly conservative portfolio in making bets that are short volatility. In particular some stocks like GME and BB and ...
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1answer
30 views

Out of the Money Puts and American/European style options [closed]

How about exercising a put option Out of the Money? Buying a put option at a price of 226$ with a strike price of 320$ on a XYZ company with a stock valued at 350$? Wouldn't that make sense? Also, how ...
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75 views

Why sell a short put at a strike price above current price of the underlying?

I understand that selling a put below the current market value provides: A premium paid up front A chance to buy stock at a lower price Item 1 achieves its maximum gain if the price of the ...
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25k views

Can someone explain the GME short squeeze situation to a non-stock trader?

GameStop Corp. (GME) stock is over $300 at the time of this post. I understand the 10,000 foot view of the story only: That some Reddit folks are buying up shares to squeeze a short seller. But I don'...
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274 views

Put Option shown as negative value

I have a cash-secured $4 Put Sell @ $0.41 through Robinhood; decided to do a low expense introduction to options. When this contract was opened, I was credited the premium of $41 and had $400 set in ...
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1answer
244 views

What is short squeeze?

The news in the market for a few days is about Gamestop stock. The price went upto $150 today, and the reason mentioned by the news is that it is a short squeeze. What is short squeeze? Does it happen ...
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1answer
63 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 ...
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2answers
37 views

Options Profit Calculation

If I buy PLTR at a $40 call, for $7.55 price per share, and I buy 5 contracts. The current stock price is $32.59. Robinhood says the break-even price is $47.55. How much money do I make if the price ...
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1answer
46 views

2 questions about puts/calls/shorting

I have 2 questions about puts/calls + shorting in my learning about options. I'm confused about how "short selling" a stock is the same/different as "writing a covered call." In ...
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70 views

Call option strike prices don't exceed stock price?

I noticed that some options have strike prices that don't exceed the current market price of the underlying stock. Why would this be? For example, GameStop doesn't have any strike prices above $60 for ...
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1answer
56 views

Question on Short Call in Options Trading

Say you want to do a short call against a strike price of k, on 100 shares on a stock. Let's say the current price is c. My question is: when you want to actually execute this call on a real platform, ...
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1answer
56 views

Wash Sale Rule - Multiple Purchases across accounts

If I purchase a stock/option, sell it for a loss, and then repurchase the same stock/option in multiple accounts, does the wash rule apply to the first repurchase? I think my understanding of options ...
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1answer
31 views

Volatility and Call Options

Say I own an in-the-money call option that I want to sell for profit. I learned that higher volatility leads to an increase in the "price" of a call option in order to compensate for ...
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43 views

Why derivatives markets are the most fragile in times of correction?

I read an article about bitcoin derivatives which has been skyrocketing lately. The author wrote at the end of the article: "Derivatives markets are the most fragile in times of correction, ...
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1answer
36 views

Option Premium Increasing Toward Expiration

I understand that premium pricing is dependent upon a few factors like intrinsic price and time value, the latter being affected by volatility. But as I look at my risk profile in thinkorswim on a ...
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2answers
52 views

Offsetting capital gains with previous losses

I only trade options. Nothing exotic but just buying and selling CALLS and PUTS. So for example if I lost 30,000 USD trading options for the 2020 Tax Year. In 2021 I go on to profit 40,000 USD. Does ...
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44 views

How do option exchanges make money on profitable long call?

When invoking a profitable long call as a trader, how does the options exchange (eg: NASDAQ) make any money? Per my understanding, the only "fees" that I pay is the premium for purchashing ...

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