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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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1answer
29 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 ...
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1answer
90 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 ...
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2answers
52 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
229 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
71 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 ...
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1answer
37 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?
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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
24 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 ...
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1answer
59 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
36 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 ...
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2answers
61 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 ...
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1answer
36 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?
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1answer
58 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
87 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 (...
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1answer
44 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
55 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 ...
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1answer
182 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 ...
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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 ...
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1answer
58 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
67 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
233 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
118 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
69 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
50 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
30 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
82 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 ...
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2answers
39 views

Does sigma in Black-Scholes attempt to take into account future events?

I am learning basic information about Black-Scholes wrt options pricing. I see that the standard deviation of the stock price is taken into account. This seems to only rely on existing (historical) ...
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2answers
35 views

Is the limiting factor in the volume of the options market options sellers or option buyers?

For example, options trade volume is less than that of equities, and most option trading is concentrated amongst a small group of top companies. However, that doesn't mean that there are profitable ...
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1answer
25 views

Implied volatility vs implied pdf

Good morning. I'm trying to download the implied volatility for at-the-money options on Eurodollar future 3 month. Is there some way to find it? Can it be calculated from the probability distribution ...
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2answers
113 views

Why did my options limit order fill so quickly?

A stock I hold went down heavily today. I found a November call option for pretty cheap, though it had a relatively large bid and ask spread. It also had low (or zero, I don't remember) open ...
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1answer
63 views

How come none of the VIX ETFs track the index exactly? [duplicate]

For example the VXX ETF (https://finance.yahoo.com/quote/VXX) does not track the index exactly (https://finance.yahoo.com/quote/%5EVIX/)
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1answer
97 views

Does option delta predict expiration probability?

I've read that delta is a probability of option assignment. For example, if you have a put with a delta of -.70, there is a 70% chance the option will be assigned. If the delta is -.04, there is only ...
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1answer
124 views

Options strategy to lock in profit

Let’s say I have 100 shares of XYZ, and over the past 9 months the share price has increased 20%. I don’t want to sell until the 12 month mark so I can benefit from a long term capital gains rate, but ...
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1answer
78 views

Is there a Greek that describe the sensitivity of an option's time value to strike?

Is there a Greek that describes the sensitivity of an option's time value to the strike price? Or is option time value independent of strike? It's obvious that strike doesn't change once an option is ...
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2answers
103 views

Does option demand influence option price?

Option prices are largely influenced by their intrinsic value: the underlying price, and the strike price. However, what effect do other factors have, including option demand? Is this ever reflected ...
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3answers
100 views

What are some strategies for profitable buying of naked options (call / put)?

I prefer naked options of the index and stocks for obvious reasons. I would like to know some strategies to remain profitable with it. Note: I choose first out the money (strike price) option ...
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2answers
291 views

Option Price changes as you get closer to earnings (but stock remains unchanged)

How do the price of options change as you get closer to earnings, if the stock doesn't change? Let's say, there's a call option that's worth $6.00 today for a strike price of $62.00 with the stock ...
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3answers
78 views

What hedging strategy can I use to approximate selling one half of an in-the-money option contract?

Apologies if the question title is confusing; I'll explain: I have one contract of an expensive call option which is in-the-money and expires next year. It has roughly tripled since I bought it, and ...
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1answer
44 views

What are the auctions redirecting some retail option orders that the WSJ is referring to and why is it disadvantageous to market makers?

In this article talking about market makers within the options market: Options on key indexes, exchange-traded funds and high-volume stocks dominate trading. Meanwhile, there is less activity in ...
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1answer
114 views

How was the media able to identify that certain VIX put and calls were made by the same entity?

From the article below, how can someone be certain all these trades were performed by the same entity? To fund it, the investor sold approximately 260,000 VIX puts expiring in January with a ...
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1answer
80 views

What stock(s) denote the unofficial start of “earnings season”?

I have heard AA (Alcoa Corporation) and JPM (JP Morgan Chase) mark the start of "earnings season" is there any other consensus?
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1answer
47 views

What types of derivatives, other than stock options, are available to the retail trader? [closed]

How can a retail trader identify other derivative instruments to trade, and how can one go about doing so?
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2answers
129 views

Why doesn't cumulative call open interest and cumulative put open interest inform future stock directionality?

For example, how come the ratio of total puts and calls doesn't accurately inform of the stock's future movement?
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1answer
91 views

Selling options on acquisition

I've been trying to understand this hypothetical scenario wherein a company in which you own options is acquired. In it, the author posits you own .67% and 20,000 shares ($2 strike price, $4 share ...
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2answers
117 views

What would happen if you suddenly entered a large buy to open position that exceeded the total combined existing open interest?

For example, suppose you are very bullish on a stock and you wanted to purchase the maximum amount of call options. Let's say the current total call open interest is 50,000 and you purchased 100,000 ...
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2answers
131 views

How open interest can be greater than the contracts traded for that day [closed]

Here is option chain data I am referring to. I was going through the option chain data. I noticed that the change in open interest was more than the volume that traded on that day. How is this ...
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1answer
22 views

Options Volatility and Settlement during a merger and acquisition

I'm trying to figure out how the vol of an option on a target change when the deal is a mix of cash stock. We know that in a cash deal, vol creeps to 0 as the deal collects approvals. Stock deal, vol ...
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3answers
65 views

Why don't options exchanges allow limit orders to include delta?

Since all options price models predict a delta (i.e., the theoretical ratio of option price change to underlying stock price change), I'm guessing most options investors and market makers are ...
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2answers
130 views

What happens to a PUT contract for a company that is sold above the strike price and before expiration?

I'm thinking of selling long dated put contracts for a company that I believe may be acquired before the expiration date. I'll use SNAP for my example. What would happen to in the following situation? ...