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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2answers
38 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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1answer
61 views

How to trade stock e.g, BABA using monthly options (wheel strategy)?

Say you want to buy up to 400 shares of BABA in the current $130 range to $100. How do you implement an option strategy in the meantime to make some extra cash while waiting for a $10 stock gain? Buy ...
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1answer
41 views

How can the prices of two deep ITM options of the same underlying, but at different expiration dates, go in different directions on any given day?

I have sometimes witnessed the price of deep in-the-money option contracts of the same underlying, but different expiration dates, go in different directions by the end of the trading day. This makes ...
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1answer
95 views

Who's on the other side of very illiquid option contract trades?

So I've been short selling Deep-in-the-Money, far from expiration Put Options on an ETF for about a year now, to profit from upward price movements on the underlying and time premium decay. Volume for ...
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1answer
43 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 ...
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1answer
93 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 = ...
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3answers
178 views

Does, buying a put involve someone to sell a call?

Does, buying a put involve someone to sell a call ?. When a trade to buy put is made from one side does it means someone is selling a call from other side. ?
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1answer
58 views

What is Derivative trading and why stock buying selling is not derivative

In finance, a derivative is a contract that derives its value from the performance of an underlying entity. This underlying entity can be an asset, index, or interest rate. By this definition stocks ...
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1answer
67 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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2answers
103 views

What happens to the 100 shares if someone "sell to close" their call option position?

Allow me to explain. Let's say I sell 1 covered call and receive the premium. When I sell a call, I am assuming that someone on the other end would have bought my call (say Nora). If the share price ...
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1answer
53 views

When are premiums received for selling covered calls/naked puts realized?

For example, if I were to buy 100 shares in APPL today and sell a covered call option with an expiration year of 2022, would the premium that I receive be realized upon sale or when the option expires ...
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1answer
566 views

What does buying put option at a certain amount mean?

Example : BUY BANK NIFTY 39000 PUT @ 246 In trading platform there is no choice like this. How does one interpret this in simple language.
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1answer
129 views

Exiting a butterfly spread is hard

I have been watching webinars on butterfly spreads and in addition trading butterflies for about 6 months. Buying a butterfly is easy but exiting a position is rather hard. I have noticed even if my ...
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0answers
20 views

Calculate options prices based on given options and spread prices

Suppose you know the following information: Futures price on a stock is 66 70 strike straddle is trading at 27 50-60 put spread is trading at 2.5 50-60-70 put butterfly is trading at 0.2 Assume ...
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30 views

European Option prices with dividends

I have a question about how dividends affect the price of a European option. I understand that because the stock price is expected to drop after the ex dividend date this causes the price of call ...
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0answers
20 views

Special Case of European Option Prices

In class we discussed the special case of where the other price on a longer term to maturity option could be less than the shorter if there is a dividend and if each option expires the day before and ...
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0answers
88 views

How will the probability change with new restriction(Red Zone)

If I sold an OTM put option(-16 delta) the probability of touching the short put strike is 32%(i.e 2*16). The risk profile is represented by the picture above. How can I calculate the new probability ...
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1answer
73 views

What’s the formula to estimate stock price (in a week or month from now) using implied volatility?

Let’s say a stock trades at $45 today and has IV of 92%. I wanna get a rough range of where the stock might be in a week from now, let’s say $32 to $58 in a week, based on the IV 92%. How do I get ...
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0answers
69 views

Sold to close options and Robinhood charged $0.04, but why and how?

This morning I BTO'd 5 call options for $30 and an hour later STC'd for $70, a $40 profit. Robinhood took $0.04 on that STC order, but I can't reason about how or why? Their fee schedule says that its ...
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3answers
276 views

Why does the DJIA take a dip on the 19th of every month since May?

The Dow Jones Industrial Average has a brief downward spike on the 19th of every month since May 2021, except where the 19th falls on a weekend - so, May 19, June 18, July 19, August 19, September 20. ...
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1answer
35 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 @ ...
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1answer
32 views

Sell Stop-Limit triggered on bid or ask?

If an option has a spread of BID $1 and ASK $1.50 and a sell stop-limit is placed with a STOP $1.20 and a LIMIT $1.15, is the stop triggered by the bid or the ask? That is, this order will not try to ...
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0answers
35 views

Difference between trading ETFs and the corresponding futures? GLD or /GC? UNG or /NG?

I am taking a hard look at options trading and I am starting with a modest account of $10,000 (I mention this because I think it might be relevant to the question). What is the difference between ...
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1answer
35 views

Covered call buy-to-close using sale of underlying?

If I write a covered call, my account will be long the underlying and short a call. Say I withdraw the premium from my brokerage account and spend it, invest it elsewhere, etc. If I want to later sell ...
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2answers
105 views

Stop limit orders are being filled immediately

Got an option trading up at $0.40, spread is $0.34B x $0.45A, so I went to set a stop limit on the order at $0.35, but the broker popped up a message that said: "Your stop price is at or above ...
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1answer
36 views

How to manage covered call position when stock price goes down

So let's say you have a position like this bought 100 shares of XYZ at $50 sold 1 covered call at $55 strike, received a premium of $2 stock price goes down to $35 now premiums for strike prices ...
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1answer
67 views

What are the advantages of warrants over options?

Is there any advantages of trading warrants over options?
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1answer
89 views

Today Stock Price is 15. Find value of Call Option

Stock price is $15 today. In a year, it has 50%-50% chances of going up or down. If it goes up, then 80% probability of the price being $25. If it goes down, then there is a 40% probability of price ...
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1answer
24 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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1answer
35 views

How much spread between bid and ask in options when the extrinsic = 0?

At expiration, an option's extrinsic value should be zero so why is there a difference between bid (which has negative value as in the example below) and the ask (which has still value over its ...
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1answer
62 views

Choose between a Bull Call Spread and a Bull Put Spread?

I am looking into trading options with an eye towards something that I would eventually do as a business. For the purposes of this question, let's assume I am working with a modest portfolio, like $...
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1answer
35 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 ?
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4answers
62 views

Selling Covered Calls p/l

I recently entered the options trading market to start generating a passive income on stocks I intend to keep for the foreseeable future. I entered a position on a pharma play with 100 stocks @ $2.70 ...
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1answer
71 views

Enrolling in securities lending program vs. converting position to a synthetic long stock

Some stock brokerages provide opportunities for their clients to earn some money by allowing the brokerage to lend out the client's shares to short sellers. Common names for these programs are: "...
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2answers
62 views

After an option skyrockets in price and IV, when will IV decay and drop?

Consider LEAPS on stocks on BNTX, GME, MRNA, TSLA or ETFs like XSD, SOXX. They've all rocketed in price, and their IV too. Once their IV drops, I'm thinking of buying them. I've been following some of ...
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2answers
117 views

Stock Trading Question - Covered Calls

My understanding of covered calls is that if I sell call options for a stock that I own and the price of the stock rises, I would have to sell my shares. What stops me from putting a limit buy order ...
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3answers
62 views

Option Pricing Range

In case of zero transaction fee, the option should have a fixed price determined from c + K - S0 = 0 where c = Call option price K = Strike price, and S0 = Current market price If this is not ...
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1answer
78 views

Can option buyers exercise their options after the market has closed on weekdays?

Although the question is in the title, I'm trading AMC options on NYSE, and I'm the seller of a vertical spread. Can I get assigned after the market has closed on weekdays like today? I've heard ...
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1answer
40 views

Pricing of options on a non-total return market index

I'm looking at ITM call options for the ESTX50 price(not total return) index. I notice that they gradually become cheaper for the same strike price, the further the expiration date is. The prices per ...
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1answer
45 views

Short options trade ITM assignment criteria

Can someone please explain something about the option spreads? How come this broker is not exercising these short options in this video as they are deep in the money? https://www.youtube.com/watch?v=...
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0answers
29 views

Should you buy call options if there is a high chance the company may merge/be bought out? [duplicate]

I heard that as long as the option hits the strike price before the buyout agreement is finalized then you're ok, but if the option doesn't hit the strike price before then the value of the option is ...
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2answers
100 views

Writing call options, when do I receive premium?

I own 100 shares of a stock and I would like to get into writing covered calls. I'm just curious: If I write a contract, do I immediately receive payment for it from my broker? Or do I have to wait ...
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0answers
36 views

An Option order conditional to ticker price

On thinkorswim, preferably within ActiveTrader somewhere, is there a method for placing a Call/Put Market Buy that is triggered by the ticker's stock price reaching a specified value? (As opposed to ...
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0answers
62 views

Unintended information asymmetry in the stock market caused by options market makers

I just went over a publication "Hedging by Options Market Makers: Theory and Evidence" by Sahn-Wook Huh, Hao Lin and Antonio S.Mello One of the ideas they touch on, is that Options Market ...
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1answer
64 views

List of all option contracts [closed]

I am looking for a downloadable list of all option contracts for US equities, as opposed to resorting to scraping. A list of commodity options would be a bonus. I am looking for an official source ...
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2answers
87 views

May I get more than the strike price difference when roll up an ITM call option?

I have an in-the-money call option that expires shortly and I see further upward potential of the underlying stock, so I decide to roll over to a longer expiration date. Now, if I choose to roll up to ...
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1answer
95 views

Do option spreads affect the holding period of the underlying stock?

Say I have 100 shares of ABC that are currently short-term. If I sell an ABC put credit spread and close either or both legs within 30 days, would it reset the holding period on the 100 shares of ...
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4answers
75 views

Put option premium decreasing when underlying is also decreasing

Had some spare cash, decided to buy a weekly put for a 7/16 expiry with a $15 strike, $0.55 premium that had an IV of ~500% and I purchased 5 contracts, for a total of $275. The underlying has fallen ...
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1answer
100 views

What happened if I don't buy back the profitable put option I sold two weeks ago?

Let's say I sold a TSLA put for 2$. If the underlying price moves up, I can buy it back when reaching 50% percent and collect 100$. What happened if the price moves up and I don't buy it back, do I ...
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2answers
51 views

Is Margin Interest Rate of a Brokerage Relevant?

I've seen brokerages intensely advertise their margin interest rate, and I've seen this being use to compare them. Why is this important, when you can get a low interest rate loan using in the ...

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