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.

Filter by
Sorted by
Tagged with
1
vote
1answer
40 views

Understanding the notion of future options

I am currently studying different types of option-related derivatives and I am quite confused about the notion of “futures options”. My textbook says that A futures option is the right, but not ...
4
votes
1answer
72 views

Do options have CUSIP numbers?

If so, then where to find them?
2
votes
1answer
50 views

what if change in open interest is very high but volume is low [on hold]

in a strike price the change in open interest is 1300000 with volume of just 1800, what does it mean if it possible please also explain difference between volume and change in open interest.
3
votes
9answers
440 views

Are stock options worth as much as shares?

I was undergoing salary increase negotiations (after a year) recently and it was decided a percentage of my salary was to be paid in shares. However, when the offer came, I noticed I would be getting ...
2
votes
2answers
70 views

Exercising Options question. Please check my math

I'm spending some time learning options and I have a scenario question. I'm attempting to have this make sense in my head but this just doesn't seem right or maybe I'm missing something. I see this ...
-1
votes
1answer
36 views

How to know when to buy a call versus a put through options statistics

Is there a good method or set of methods that traders can use to know whether to buy either a short term call versus a short term put using only numbers provided in options trading?
0
votes
1answer
42 views

What is the effect of a short stock position on the value of an option?

I'm reading the book "Option Volatility and Pricing" by Natenberg and there is a paragraph I'm having trouble understanding. Chapter 7 (Risk Measurement 1), Page 98, Paragraph 2: The value of a ...
2
votes
3answers
104 views

Are there investable securities that grow nonlinearly/exponentially with the underlying asset?

Let's say I'm a commodities trader, and Jesus Christ himself has just told me that gold is about to become much, much more valuable. We'll leave the debate on whether that's insider trading to another ...
3
votes
3answers
102 views

How to calculate the relationship between a long put and a long call with the same strike price

I have noticed that, a lot of the time, long put and call options have different prices even if they are the same distance from the strike price (lower and higher respectively). Is there a name for ...
2
votes
1answer
66 views

Tax implications of rolling covered calls

I have friend who is using the covered call options. Some time these covered calls are near assignment and then my friend rolls these calls with higher strike price. What are the tax implications ?
3
votes
5answers
103 views

Realistic option graphs?

Typical option graphs are only valid at the time of expiration: This only expresses what happens at the moment of expiration (and ignores trading costs). But what about extrinsic value (theta and ...
7
votes
2answers
2k views

Why do options retain significant extrinsic value after market closing on day of expiration?

Introduction to options sources invariably say an option's extrinsic value becomes zero at expiration. However, in reality this is not the case. For example, it is almost 7pm on 8/21 and "8/21 292 SPY"...
3
votes
1answer
130 views

I sold call options that expired ITM. Why were they not exercised?

I sold two covered call positions that expired Aug 9. Both expired ITM. The 1st one's strike price was $3.00. At expiration, the stock was $3.13 so 13 cents ITM (6 contracts). The 2nd one's strike ...
1
vote
1answer
36 views

How to research option maturity dates and volume [closed]

Hello stack exchangers How do I get a list of stocks with their option maturity dates and volume? I am interested in stocks that have frequent maturity dates and high volumes. Once I have a list ...
1
vote
1answer
36 views

Are funds securing short puts in a cash account considered settled for free-riding?

For cash-secured put writing, I have enough cash in my account to cover the put if it is exercised. Is there a special category that this cash falls into with respect to free-riding? Say I wrote a $...
2
votes
2answers
59 views

How does exchange match multi-leg option orders?

Suppose I submit an order to open an iron condor or some other multi-leg stock option spread with multiple buys and sells. For example, if SPY is trading at 275, I might want to: sell a call at 290 ...
1
vote
1answer
53 views

Size limit on option buying and selling

While using Robinhood I have found that can buy/sell a maximum of 200 call options at a time. Is this a general rule for all trading clients at other brokers such as Ameritrade, Merrill Lynch, etc.?
0
votes
2answers
283 views

Selling options below bid on Robinhood

If you sell an option for cheaper than what is someone willing to pay, does Robinhood sell it for the best price or for the price you chose to sell it? I'm trying to figure out if I can do stop loss ...
2
votes
2answers
120 views

Why are vertical option spreads level 3, requiring margin?

Why are vertical spreads (e.g., buying a call at one strike and selling a call at another strike, at the same expiration date) classified as "Level 3" options strategies, therefore requiring margin? ...
0
votes
1answer
91 views

When an option expires does that constitute a buy or sell

A similar question recently asked about stock sales and option buys triggering wash sale rules. If an option expires, is that considered a buy/sale ? What I mean is: let's assume I have a call ...
0
votes
1answer
723 views

Robinhood doesn't allow you to exercise call options in the app?

On the Robinhood website, https://support.robinhood.com/hc/en-us/articles/360001331403, the following is written about exercising stock options: Can I exercise my call before expiration? Yes. ...
0
votes
0answers
109 views

Nadex binary option - trading at excessive prices?

I recently came across Nadex and in particular their binary option markets. Such an option pays off $100 or $0 depending on whether a specific exchange rate exceeds a strike price at a specific date. ...
2
votes
2answers
183 views

Why are options only traded during market hours?

I was wondering why options are only traded on exchanges during market hours and not after hours like stocks. Is it a liquidity issue? For the mega cap stocks though, even the options market has a ...
0
votes
3answers
71 views

Option trading spreads

When doing a vertical ( or any ) option spread trade how can you do it with options without having to actually buy 100 shares of stock? Is it possible just by buying 1 option contract? How is this ...
2
votes
1answer
43 views

Are there any other benefits to exercising EMI stock options straight away vs. as late as possible? (UK)

Once my options vest, according to the EMI scheme I have ten years to exercise them. I'm weighing up the pros and cons of exercising exactly at the point they vest versus leaving it to the last ...
0
votes
2answers
54 views

Put IVs being more than Call IVs - Can this be considered a bearish signal?

If in an Option Chain, 1) Average Put IVs are 4-5% more than average Call IVs 2) IV of Put Options, in general, is more than IV of equidistant Call Options (For eg . - For a stock @ 100 spot price, ...
3
votes
3answers
149 views

Determining the price of an option when it hasn't been traded recently

I am looking at MDB LEAPs. Right now the price of the stock is up about 7% from open. Some calls are up, and some puts also show up, which I guess is because they haven't traded today (I am using ...
1
vote
1answer
53 views

Naked Put at Expiration

For most brokers, how naked put works at the expiration? Buy the option at that price, if ITM. Buy the underlying stocks if having enough cash in the account. For 2, does it depend on if the option ...
3
votes
4answers
238 views

Trying to get my head around how options work

A stock X is trading at $215. I bought a put at a strike price $195 for $2.55 premium(paid $255) expiring June 7. Today the stock is down by $15 to $200. However, the price of my put is reduced from $...
4
votes
3answers
174 views

Sold a bullish vertical credit spread and was assigned early. Need information about a margin charge

Recently I was assigned on a short deep in-the-money put. It created a huge margin call. I called the broker the following day to exercise my long put to flatten out the position. He did that ...
0
votes
1answer
103 views

Iron Condor Profit Probability

I'm trying to see if I understand Iron Condors correctly and how to assess whether or not the risk is worth it for a given set of circumstances. The maximum profit on an IC is realized when all ...
1
vote
3answers
196 views

How to buy a contract for S&P 500 index?

I am researching writing covered calls on S&P500 index. So in order to sell covered call I need to buy a contract for S&P500 index. I've never traded indexes. What exactly I will be buying (...
0
votes
2answers
56 views

Is there a relationship between Post Hours Trading Volume spikes and Options?

So, I have watched a short video (https://www.youtube.com/watch?v=lXRAhoNd-50) of Lawrence McMillan talking about trading options on or near expiration. He discuss that arbitrageurs says that they buy ...
1
vote
3answers
267 views

Who do you buy options from, if open interest is zero?

If open interest is 0, who will you buy an option contract from? And how the price is calculated? Also, initially, how the option contract price is determined?
3
votes
3answers
271 views

How to Hedge delta and gamma of a put option simultaneously?

Say you took a short put position of 100 options (as you feel the option is undervalued). This put has a Delta of -0.5, so to make the portfolio delta-neutral you short 50 shares of the underlying ...
1
vote
1answer
64 views

Mortgage Holders as Option Writers

Can someone explain to me how does it benefit the mortgage holder to be a writer of the option call on the long term debt and the put option on real estate prices? Other than the premium be gained I ...
1
vote
1answer
43 views

payoff at expiration of a protective put

Hello the question I was asked was What is the payoff at expiration of a protective put (a portfolio consisting of one share of stock and one put option on that stock with strike price K) if the ...
1
vote
2answers
118 views

Delta of a Vertical Spread | Slower than delta of long option?

People often prefer to trade options spreads rather than buying options, since those reduce your cost and have a defined profit and loss but what is the probability of success of a spread? For example ...
0
votes
0answers
27 views

Futures and premium

A stock will either go up to uS or down to dS next period. The risk-free rate is r. I'm using replicating portfolios to derive the premium on a futures contract with futures price F. What would the ...
3
votes
2answers
138 views

Why certain ETFs are popular( liquid) but Options on very same ETF are not

For example on comparing EEM/VWO , SPY/IVV/VOO etc and I always wonder why some ETFs are popular but options are not. I see a question How to pick ETFs that hedge against stock market crashes? that ...
2
votes
3answers
93 views

Why Options trading is charged on per contract basis

I have been trading options for years, but could not understand why Brokerages charge fee on basis of number of contracts. Per Fidelity : Trade for just $4.95 per online trade, plus $0.65 per ...
5
votes
1answer
110 views

why some brokerage does not allow uncovered (cash secured) put via online order?

In past, I had brokerage accounts with Vanguard and I have option level approved for writing uncovered put( Level 4). I could place covered call orders via the website. But to place uncovered put ( ...
2
votes
4answers
105 views

What do option contracts look like?

Options are said to constitute in essence a legal contract for one party to buy or sell an assets at a set price in a future time. In modern trading, is there also an actual contract in fact, that is ...
-1
votes
1answer
139 views

Buy pre ipo'd start up company stock in small amount? [closed]

Is there any investment website/company through which I can buy small amounts of pre-PIOed company stock in a smaller amount? Most require $100K worth of investment. e.g. as an average investor can ...
1
vote
2answers
149 views

Option trading for dummies

If I buy a $200 call option for $22 ($0.22) that expires in 3 weeks, with a current share price of $140, can I sell the option two weeks from now if the share price has reached $180? I'm asking ...
0
votes
3answers
160 views

The math of this Investopedia article

I'm a little confused on how this article comes up with $650 instead of $700. From Investopedia. Consider the following example: XYZ is currently trading at $99.00 You own one XYZ Oct 90 ...
0
votes
1answer
43 views

What Happens to OTM Puts Following a Cash Aquisition?

Say I purchase OTM puts with a $5 strike and the underlying company is acquired through a tender offer that pays $19.00 cash per share. My contracts are accelerated and adjusted to reflect the new ...
0
votes
1answer
185 views

Spitznagel Black Swan Hedging

I am reading about how Spitznagel does hedging from Forbes - Protect your Tail. It's unclear to me how he is getting the returns he is claiming, Spitznagel's hedges mostly involve buying far-out-...
1
vote
3answers
140 views

Crash O Phobia and the reason for higher pricing of out of the money puts

In my stochastic finance course we are currently talking about Implied Volatility and Crash O'Phobia. According to Rubinsteins Crash O'Phobia, put-sellers attach a higher probability to the left tail ...
1
vote
2answers
101 views

Dollar Cost Averaging with At the Money Straddle

I was reading Dollar-cost averaging using an option strategy. Consider one month's investment of $30k. Looking at the VTI options, selling at ATM straddle expiring on June 21 worth $3.04 + $6.91 = $9....