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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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Qualified Covered Calls and Naked put positions

Suppose an investor owns 100 shares of the XYZ stock in a qualified covered call position. He is also short puts on the XYZ stock. All of this is down outside of an retirement accounts. He has an ...
Bob's user avatar
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1 vote
2 answers
122 views

Can someone explain to me the best option strategy here?

NOTE: By "covered put" we mean covered by a short position, not a cash-secured put. I have the following question from my SIE textbook: If a customer had a large cash position and was ...
Cotton Headed Ninnymuggins's user avatar
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1 answer
63 views

On a call option to get out of a call option contract I have to ask

I sold a call stock option. Now the price of the stock is higher than strike price of option. To cancel my contact, would I have buy to close the option at the current price?
JonThan Holzworth's user avatar
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0 answers
25 views

Large ATMU trades : were they sold calls or a bull call spread?

Here's all the options trades for ATMU on 2024-03-21 that had a premium greater than $10,000: I've highlighted two that were both of size 10,000. In both of those, the price is closer to the 'bid'. I....
dharmatech's user avatar
2 votes
1 answer
117 views

Why doesnt the ask reflect my asking price when I put in a sell order below the listed ask?

Currently I am trying to sell some options on ThinkorSwim that have a bid x ask spread of $8 x $8.5. When I remove my ask, the spread widens so that the ask is in the $9 range so I am fairly confident ...
BrooksC's user avatar
  • 21
0 votes
2 answers
65 views

If I sell a put option that expires ITM on the ex-dividend date, do I get the dividend?

Say I sell a put option committing to buy X stock at $50 on Y date. Y date is also the ex-dividend date. The put option expires in the money, so the option buyer will exercise the option and I end up ...
Allure's user avatar
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0 answers
64 views

Do market makers do gamma hedging on option futures ES?

Do market makers do gamma hedging on MES and ES and does that impact ES prices, or is the ES price only impacted by gamma hedging on SPX and SPY according to volumes?
yassir mimouna's user avatar
0 votes
1 answer
85 views

Interactive Brokers - API for Implied Volatility Comparison chart

Does anybody know a way how to download data from Implied Volatility Comparison chart from Interactive Brokers TWS? Is there any API method (either REST API or TWS API) for that? Or do you know any ...
Jan Jůna's user avatar
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0 answers
69 views

A Question about what counts as a qualified covered call for tax purposes

Below is a quote from IRS Pub 550: Qualified covered call options and optioned stock. A straddle is not subject to the loss deferral rules for straddles if both of the following are true. All the ...
Bob's user avatar
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2 answers
137 views

What's the capital needed in order to achiev $500 monthly with Options Trading

I'm looking for some advice on to achieve a monthly income equal to my monthly expenses which is 500$ - I already have a portfolio of monthly dividend stocks valued at around $1,200, which provides me ...
MorMinimumWageGuy's user avatar
0 votes
1 answer
89 views

What are the settlement times trading futures in a cash account

So I’ve been trading options for almost a year now and have decided to give futures a try. I have a cash account not a margin and know that with options once I trade all the settled cash in my account ...
Landon Gross's user avatar
0 votes
4 answers
126 views

how do in the money options work

if i buy a call with a strike price below the current market price, could I sell it immediately for a profit? How does a strike price below the current market price work.
will-s's user avatar
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1 answer
37 views

How does one decide Moving average and its cross-over parameters to use

For the purpose of trading options of a volatile index, I want to understand how to decide between the following for a particular indicator, say, RSI: Assuming that the RSI changes from 0 to 100 in a ...
user173399's user avatar
2 votes
2 answers
810 views

Is it considered insider trading selling options on company gifted shares of stock?

If you receive stock as apart of your company compensation is it insider trading to sell covered calls on your stock? What if your spouse who literally doesn't know anything about the company is in ...
Michael Hearn's user avatar
3 votes
1 answer
150 views

ITM long put resolution after expiration

I'd like to understand how the following scenario is handled. I'm using Interactive Brokers and its cash account and I'm talking about US stock options. I don't take into account transaction fees and ...
pavelsaman's user avatar
1 vote
0 answers
39 views

Calculating preferred share conversions to common using weighted average

I am trying to make an informed decision as to whether or not to invest in a private startup company by exercising vested options from a grant I obtained while working for the company as an employee. ...
ThaDon's user avatar
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-2 votes
1 answer
157 views

Exercised an option got the stock less a thousand dollars

The stock price is $19.00 per share. I bought a call, and the strike price $7.50 for a premium of $7.90, at the bottom before I submit it, read "you are paying $790 the right to buy …. At a $7....
Jose Fajardo's user avatar
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0 answers
53 views

Black Scholes PDE vs closed form

What is the difference between the 2 formulas below, how and why we choose what to use? Does PDE simulate option price through time, therefore we can use it for American options as well? Black Scholes ...
Skittles's user avatar
2 votes
1 answer
67 views

Options settlement in the event of an exchange halt

Are in-the-money options expiring on the current day guaranteed to be exercised in the event of a level 3 trading halt? Are there any circumstances, within or outside trading halts when options may ...
er0's user avatar
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0 answers
55 views

Building buy&hold ETF portfolio by writing ETF puts? [duplicate]

Does building a buy and hold index ETF portfolio by writing puts on the desired ETF, and possibily getting assigned, yield a boost over buying the ETF the standard way ? Is it a good idea ?
Raoul's user avatar
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2 votes
3 answers
488 views

why volatility increases price for ITM call options?

Similar questions have been asked here, but I'm not able to find this exact question. For a European call option, if it's very in-the-money, wouldn't a higher volatility decrease the probability it ...
APerson's user avatar
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0 answers
53 views

anyone know how to solve this real option problem (derivative securities)?

The purpose of the question is to determine the 'replicating portfolio' of options that is equivalent to the project described. The equation for the profits from the project should be: $25M - 10,000*(...
seamus's user avatar
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0 votes
0 answers
62 views

Option Volatility and Pricing : value of a stock option will also depend on whether a trader has a long or short stock position

Book: Option Volatility and Pricing Chapter: Risk Measurement I Topic: Change in interest rates can affect options The value of a stock option will also depend on whether a trader has a long or short ...
user126526's user avatar
0 votes
3 answers
120 views

Types of options trading and which is more popular

For the average retail options trader do most buy options in the hopes of exercising it or do most buy options , resell and profit of the net of the premiums by doing so, much like buying and ...
j jose's user avatar
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0 votes
2 answers
101 views

Hedging with options

Online when I see people talk about using options to hedge, they always seem to talk about it in the put options sense. For example you buy a stock expecting it go up, but then just to be safe you buy ...
j jose's user avatar
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1 vote
1 answer
70 views

why do people say implied volatility is a better predictor of stock price than the actual stock price?

why do people say implied volatility is a better predictor of stock price than the actual stock price changes itself (ie historical data etc), even though implied volatility comes from the options ...
j jose's user avatar
  • 39
1 vote
1 answer
66 views

Question about offsetting options contracts

How exactly does offsetting an options contract work , for example if we're to go long on a call or put position in order to offset it i would need to short a call or put position, this eventually ...
j jose's user avatar
  • 39
0 votes
1 answer
69 views

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 ...
Thomas's user avatar
  • 103
0 votes
1 answer
46 views

References/terms to search for regarding financial instrument universe selection

When attempting to profit off of the market in one way or another, an entity, be it a fund, individual investor, institution, etc., must first decide on what actual financial instruments are to be ...
QMath's user avatar
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-1 votes
1 answer
260 views

Is Implied- and Historical Volatility based on solely Business days?

I'm trying to compare historical and implied volatility for different stocks. Still, since I can't tell what these numbers are based on (for historical volatility) and referring to (for Implied), I'm ...
Telefondemonen_se's user avatar
5 votes
2 answers
885 views

Is there likely to be a market for private company incentive equity if it's assessed value is more than it's worth?

Let's say I have some stock options in my company that I can exercise for $x. And the company's value has been assessed by some external entity to revalue the stock to $x+y. The company is still ...
Ken - Enough about Monica's user avatar
2 votes
3 answers
584 views

Shorting a company's stock after leaving

If a person just generally thinks a company is poorly run and decides to quit, would shorting the stock count as trading on non-public material information? If it's not based on any specific piece of ...
Abe's user avatar
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1 vote
2 answers
136 views

Working around IRA contribution limits using options

Lets say I have a taxable brokerage account with $1k of shares for ABC. I'm reasonably sure ABC will go down over the short term but don't want to sell it so I buy puts. But since I just opened a Roth ...
swiley's user avatar
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0 votes
1 answer
315 views

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 ...
surewin's user avatar
  • 29
1 vote
2 answers
221 views

ITM option exercise immediately after buying on E*Trade

I bought a put option with strike 453 for 3.23 per share with the current underlying price at 448. This means that I should be able to exercise immediately and make 1.77 per share profit. I’m using ...
JohnDough's user avatar
0 votes
2 answers
81 views

DOW Mini Futures Options Liquidity - Symbol YM

I am trading on the Interactive Brokers TWS platform. That is the name of the broker and the platform they offer that I use. I have noticed that there is almost no liquidity on the YM Mini option ...
ajnabi's user avatar
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1 vote
1 answer
79 views

Deducting option trading losses for income tax filing

I am in India. Let's say I have an income for 25 lakhs and my losses in option trading for 10 lakhs. How to file ITR for the same? Will my losses in option can be carry forward for 8 years? Suppose I ...
KALAI SELVAN's user avatar
-3 votes
1 answer
185 views

How to price this contract in this scenario?

Here is the question: You want to sell a painting you inherited from a grandparent. There is a 10% chance it is painted by a famous artist, in which case it's worth 100k. There is a 30% chance it is ...
CountDOOKU's user avatar
0 votes
1 answer
85 views

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 ...
APerson's user avatar
  • 89
0 votes
1 answer
49 views

Breakeven for debit spread

How are the Max Gain and Break Even calculated here on Fidelity? I thought the breakeven would be the strike price of the long call plus the net debit: $16 + $6.03 = $22.03 And the max gain would be ...
Quaxton Hale's user avatar
1 vote
1 answer
99 views

Can you trade options with market scoring rules?

In a double-auction market, buyers and sellers are always balanced in number -- a traditional market-maker in such markets doesn't really hold any assets/take any position long-term. However, with a ...
Abhimanyu Pallavi Sudhir's user avatar
0 votes
1 answer
119 views

Option trading to avoid overnight fees over a short position

I do a lot of short selling as a day trader. There is a pattern that I trade often. This one asks me to short and keep my position for several days. The problem I have is that the broker charges too ...
David's user avatar
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1 vote
3 answers
72 views

How do Short Vertical Spreads work exactly?

I wanted to get into options trading and have been watching a couple of tutorials.All was well until I hit short vertical spreads.I used skyview trading resources for this. https://www.youtube.com/...
Abhirath MS's user avatar
0 votes
6 answers
3k views

Why call options are more profitable compared to stock trading?

I am having a hard time trying to understand why buying call options are more profitable (if you predict the market right), compared to selling & buying stocks right away. Let me explain my ...
Frenk Frenk's user avatar
2 votes
1 answer
91 views

Profit gained by exercise and selling of incentive stock options

For the below mentioned scenario, I want to know how much profit I will make if I sell all my options. I am new to the world of stocks, and any help will be greatly appreciated. My company has granted ...
Ling Guo's user avatar
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0 votes
2 answers
209 views

Comparing option deltas of significantly different underlyings

Please help me correct or confirm my intuition about options deltas. My understanding is that delta is the change in an option's price given a $1 change in the option's underlying. Moreover it's ...
geofflittle's user avatar
0 votes
2 answers
126 views

On the meaning of Delta hedging

Basically, I'd really like to give a natural interpretation of as prescribed by the Black-Scholes model for European derivatives, where O(t) is the option price and S(t) is the price of the ...
ric.san's user avatar
  • 101
1 vote
2 answers
289 views

Clarification on SELL PUT in Options trading

There is a stock currently trading at $.64. If I go to options I can do a sell put for $7.50 and then a buy put for 2.50. Robinhood tells me I get a premium of $470.00 ($.47) and my potential profit ...
Frank's user avatar
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1 vote
2 answers
302 views

selling covered calls below my average cost

I have this stock more than 2 yrs and wont go up , I am planning to sell covered calls all my shares just to return my capital ... example my average cost is 5 and I am planning to sell it at a strike ...
user avatar
1 vote
2 answers
144 views

Short selling options, can brokerage force seller to buy back the options

In case if I short sell ETF or stocks, brokerage can ask short seller to cover the position even if the user is paying interest and is within margin limit. With this question, I want to know in case ...
puzzled's user avatar
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