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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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4answers
93 views

What fundamental value do Options give the economy?

I had been wondering lately what the economic value that financial Options (Calls, Puts, American, Bermudan, etc) give to the economy is. In essence, what good do they give us, vs. simply trading the ...
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2answers
43 views

Probability of success in a Bull Callspread

Suppose I have a bull call spread where I am long on an ATM Call (+ 0.509 delta) and short OTM call (- 0.220 delta). What will be my probability of success in this trade?
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3answers
173 views

Selling options to myself… which law does this violate?

If I sell a covered call from my IRA well above market value and use a separate account to buy the call, I've effectively added money to my IRA beyond the IRA's annual limit. (I can ensure I'm buying ...
2
votes
3answers
76 views

Why would an option's price not change with the underlying?

I saw a stock increase about 1.5% this week, but its June 2019 in the money option price didn't move. 'Last' has been the same for awhile, but I thought bid/ask (what my broker uses to decide the ...
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0answers
18 views

Difference between deltas of American vs European Call options

Is there a difference in the value of Delta of American and European options with the same underlying asset price, strike price, time to maturity? Also, is there any way to determine the price of an ...
1
vote
1answer
61 views

Is there a minimum age requirement for trading options?

On interactive brokers I was filling out an application to open a cash account, but I did not see the option to choose options as a product I can trade. Is there a minimum age requirement or is it due ...
0
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1answer
48 views

Online Investing and Trading Cryptocurrencies, Equities and Options in U.S. Markets [closed]

Would you be so kind and tell me which brokerage services might have fastest website and features (e.g., "limit orders", "stop limit orders", etc.) for trading cryptocurrencies (e.g., from BTC to DOGE)...
2
votes
3answers
114 views

Starting with options trading

I am a regular trader with stocks but I am a complete beginner with options. I am referring to a few online resources like here and here However, I have a few questions. Say I call a stock at $50 ...
3
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1answer
39 views

Put Option Payoff Replication (Dynamic Hedging)

We know that we can use the below equation in the link to replicate the payoff of a call option using stocks and bonds. I am wondering what the equation would look like for a put option instead. In ...
3
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2answers
2k views

What happened to my GE option?

I had contracts of GE1210115C17 that I went to check on this morning. The option is gone with the following entries in my bank activity log: 02/26/2019 XXXXXXXJJ DISTRIBUTION - Details (Opens Pop-...
0
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1answer
65 views

Stock and Class Question

The current price of an American call option with exercise price is $130 written on X company is $2.40. The call option expires on March 19,2019. the current price of the stock of X company is $126.69....
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0answers
13 views

Does AMT for incentive stock option exercise affect cost basis? [duplicate]

Suppose I exercise some options from an ISO grant and doing so triggers AMT. Does the fact that I paid taxes on the bargain element of the option affect the cost basis of the stock or is the basis ...
0
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1answer
30 views

Options being exercised

I know that shorting a call option that ends up in-the-money makes you obligated to buy 100 stock shares for the buyer and that the brokerage firm does it automatically for you. My question is, will ...
0
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1answer
43 views

Wash Sales - Applied to Options

Does anyone know how to account for wash sale that attached based on purchasing options where the last transaction was the purchase of an option that expired worthless? The issue is that there is no ...
1
vote
1answer
123 views

Why are options that cannot be traded in cents still show a last trade as non-five-cent increments?

I read Why do some options trade in 5 cent increments? but despite that I see some options I cannot trade in pennies ( not broker specific), but I routinely see same option being traded by others in ...
2
votes
1answer
42 views

What's the difference between a variance swap and a long straddle option trade?

A long straddle is when one is anticipating a swing in stock price, but you’re not sure which direction it will go. And a variance swap is a financial derivative used to hedge or speculate on the ...
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3answers
148 views

Why not sell a call option with strike price below stock price?

Learning a bit about options. Can anyone explain to me why this is a bad idea or wouldn't work? Assuming example stock XYX with current price of $5.10, with calls selling for $.50 at a strike price ...
3
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0answers
156 views

Sold a call option and it expired out of the money and I was in debt?

this is just eating my brain away, I couldn't find the solution on my own so I'm here to see if anyone could help me. Today was the last trading day of options on VIX, I sold 5 Call options at 0.05 ...
1
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2answers
81 views

Would you rather long 2 call options ATM or long one ITM and one OTM?

Theoretical question but which one is the best mathematically? 1) Buy one ITM call option with strike (price-5) and one OTM call option with strike (price+5) 2) Buy two ATM call option Which one is ...
2
votes
2answers
66 views

Why are option contracts dated for Friday expiration instead of Saturday expiration?

Don't they technically expire on Saturday even though the options market closes on Fridays? I feel like the way it stands, this can screw with people with after-hours trading on the underlying. Or ...
0
votes
1answer
101 views

“Break even” price on call options is lower than current stock price?

I am using the Robinhood app and see call options with breakeven prices below the current stock price. Is there a reason why you wouldn't just buy this option and then sell it off immediately ...
0
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0answers
31 views

What happens to long otm oex puts if you exercise them?

Since OEX index options are cash settled and are American style, what would happen if you decided to exercise an out of the money put? Would you end up paying the difference between the strike and ...
0
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2answers
100 views

What kind of stock option (European, American, exotic) is more popular? [closed]

I would like to know whether investors tend to prefer European, American, or exotic (aggregation of several options) stock options, either put or call. I also would like to get an idea of the relative ...
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1answer
50 views

Expected stock price move using IV

From this post https://www.projectoption.com/expected-move-explained/, he uses the following formula to calculate a 1 SD move in the stock: How do you know which stock option to use for this? For ...
1
vote
1answer
115 views

A lot of bids and asks, but no volume

I'm looking at an option and it has a lot of bids and asks, but zero volume. Does this mean that the market can't decided on the price of the premium because the stock itself is moving? Just curious ...
2
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2answers
57 views

How does share consolidation impact options?

Kinder Morgan Canada did a share consolidation that took effect today. I see there are still options out there that reflect the unconsolidated price. Would someone buying the put option after the ...
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5answers
253 views

How does buying a call option make more money than simply buying stock?

By my reckoning, buying a call option on a stock when you believe it will go up will never yield as much profit as simply buying the stock outright. For one, the strike price is generally higher than ...
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3answers
72 views

Are collars really downside protection?

I see collars often mentioned as downside protection for a stock you own. My question is: How? Let's say you bought at stock at 45 and it is now 50. You can collar the 45 cost basis (one strike above ...
0
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1answer
39 views

How sensitive are heavily traded options (SPY, AAPL) to brief price changes?

For example if SPY reached a day high of +2% but only for minutes, would call prices rise accordingly such that one could profit from the STC sale of an option of the same strike price?
2
votes
1answer
36 views

Option value changing, but not in the options chain

I bought a LEAP a few weeks ago. Its value swings wildly on my broker's webpage (my broker is my bank; maybe they don't have the best interface.) However the price on the options chain (from NASDAQ) ...
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1answer
27 views

How are the prices for Options during Global Trading Hours (GTH)?

I am thinking about purchasing SPX options on the CBOE during Global Trading Hours (GTH). I am wondering, for people with experience doing this, what kind of prices do you see during this time? Are ...
0
votes
1answer
61 views

Is legging into bull credit spread a good strategy?

Let's say I've written at put at 50 (naked put). The stock price has come down from 57 to 52. I want to reduce my exposure. Is buying a put and creating a credit spread a good strategy for this ...
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2answers
38 views

Currency Future Contract's future fixed price?

Future and options are basically the same with the other using premium and w/o obligation. When trading FX options, you set/buy a strike price. Hence an agreement/was made on a fixed price. In the ...
2
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2answers
68 views

Meaning of IV for a strike

As I understand it, IV is defined as an annualized 1 standard deviation range for an underlying. So what is the meaning of implied volatility for a strike? The IV on each strike is calculated by ...
1
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1answer
41 views

Is all of put option time value when OTM?

If I sell a Dec 65 strike put on 12/3 and on 12/7 the stock price is at $74 and the put bid/ask are .35 x .37, how much of that is time value?
1
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1answer
84 views

Long term option sell short term options against it

Company A is currently trading at $100. I bought 10 calls at a $110 strike price which expire in six months. What would be the best strategy (risk to reward) to buy or sell monthly options against ...
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2answers
91 views

Understanding the technicalities in options (put example)

My goal is to use options on a speculations level. I'm a bit perplexed with what I see on the broker account and thought this will be a good place to post my questions. So, here a fake-scenario (...
2
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1answer
52 views

Are bid and ask prices set by the market directly, or by the market makers?

I believe the answer is the latter, but I'm looking for more detail, hence the question. For low volume stocks and options I have bid lower than the current bid, and while usually my limit order isn'...
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1answer
38 views

What price is used for my option's current value?

I purchased one call option contract on a company and in my E*Trade account the "Last Price" is listed as $11.70. However, the value of my position is listed as $1325 which would suggest a price of $...
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2answers
58 views

Hedging investment contributions against short term fluctuations

When contributing to investments, short term fluctuations can hurt my contributions by a few percent or more. By short term, I mean on the scale of days to several weeks. I have found that a proper ...
3
votes
1answer
497 views

How urgent is it to close put options when a company enters bankruptcy? How likely is it to have trading halted?

I own Jan-2020 put options on a company in bankruptcy, but the stock is trading between .25 and .50 and my limit orders to sell those puts are not getting filled yet. The trading on the shares has ...
0
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1answer
31 views

Is it likely for large buy to open orders to be filled on thinly traded options?

Suppose you are very bullish or bearish on a stock but its options are thinly traded. Some stocks have an options market that doesn't exceed $200,000 even around earnings time. Say you want to ...
0
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1answer
59 views

Do I understand options open interest correctly?

I wasn't able to find a good example of how open interest works. Suppose at the beginning of trading period there is no open interest, these are the only trades made during these days, and all ...
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2answers
68 views

Neutral to bearish options strategy above stock price

If a stock is trading at $30 and I believe it will go no higher than $33, is there a spread that I can create above $33? This is a neutral to bearish strategy. I've looked at a debt put spread: ...
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3answers
236 views

Strategies for under water stock?

If I have a stock that I got in at $40 and it is now at $22, are there any strategies that can be utilized to reduce the loss? Covered calls with a 40 strike are far too cheap. The 30s are the only ...
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3answers
135 views

What are the most highly leveraged ways for a retail investor to bet against volatility (or inverse volatility)?

I am aware that there is an inverse VIX ETF, but it is not leveraged. The only other way I can think of is to buy VXX puts? Is there another method I am not aware of that provides more leverage?
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0answers
74 views

Stock Options in Exchange for Salary

I received an offer letter with with the option to convert part of the salary to stock options as per the below table. Base salary is ₪33K/month (Israeli Shekel). Be aware of '₪' vs '$' in some ...
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1answer
51 views

Why are my funds locked up in my trading account while using bear put strategy?

Today I used a bear put strategy and I was surprised to see that some funds in my trading account were locked up as margin used. It is well known that the potential loss in bear put strategy is ...
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1answer
33 views

Implied volatility for options

To predict where a stock might trade at a year from now, you use a formula based on HV, stock price x IV, and that provides an assumption of where the stock might trade at a year from now. When ...
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1answer
204 views

Risk of selling stock cash secured puts and covered calls

I'm trying to determine what the potential downside is for selling call and put options, aside from the obvious loss of money if the stock moves past the strike price of the call or put sold. Right ...