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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How are SPX index option prices determined in the 15-minute period after the close?

There are SPX index options that expire every single day now (Mondays, Tuesdays, Wednesdays, Thursdays, and Fridays). I know that SPX options will trade until 4:00pm ET on the day of expiration. ...
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What is a good API for accessing historical options chain data [closed]

I'm looking to analyze historical options chain data for backtesting an algorithm. I don't mind paying. Are there any services that offer this data?
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Why do the quarterly "PM settled" options for the S&P 500 futures have about 1000 points between each strike price?

I'm looking at the options chain for the S&P 500 futures. Almost every option contract I look at, whether it's a daily option, weekly option, monthly option, or quarterly "AM settled" ...
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Can I take profit in option trading if

If the current price of a stock is at 2000 and I take a call option buy at strike price 2100 weekly expiry with 80 ltp. Suppose now ltp increases by 5 points and yet the price does not go above 2100, ...
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Aren't options priced asymmetrically for Inverse and Leveraged ETFs, for the same underlying index?

I ask merely about pairs of Bear (Inverse) and Bull (Leveraged) ETFs for the same underlying index. The Bear ETF's price shall be bounded below by 0. But the bull ETF's price is unbounded. But doesn't ...
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Best approach to select strike prices for an Iron Condor?

Options beginner here. I'm aware of three popular ways to select strike prices for Iron Condor. Select strikes such that they are equidistant from the CMP. Select strikes such that the they form a ...
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How do I close a put option when the company is about to file for bankruptcy?

I opened a put options by selling so I must buy to close. The company I have the open option position with is about to file for bankruptcy. How should I go about closing my put option. What's the ...
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Does it make sense to repeatedly increase your limit order price in small increments until your order fills?

Whenever I buy a security, I always use a Limit Order. Just to be safe, I input a price just below the Bid Price, e.g. 21.80. Why? In case the spot price dips suddenly! See below. This cheap trick ...
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Can American Option Be Exercised After It's Not ITM Anymore

If an (American style) option enters the in-the-money price zone on a day while the person holding the options contract isn't paying attention to the market, and later on (let's say the next day), the ...
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Are VIXW options PM-settled like SPXW?

Cboe explicitly defines the difference between the options on SPX as AM-settlement and SPXW as PM-settlement, but for VIX and VIXW, they say they're both AM-settled. I can see in my trading platform ...
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How can I bet against a particular stock in relation to the market?

I’ve heard people doing spread trades when they think one stock will do better/worse in comparison to another stock or index. I’m looking for details on exactly how this is done. Is there a particular ...
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how to sell short - buy/sell to open/close

I'm intstd in selling short as there's a stock I think will drop, but i've never done it and am filled with trepidation. I head to options on my trading site and off the bat seem to have five......
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I've been making a lot with options trading/pricing, but is it just luck? [closed]

So I've been trading for a while now, but after my internship, I learned about the different types of option pricing models like JumpDiffusion and CubicSpline. So I have begun trading both relative ...
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How would I calculate the wash sale permanently disallowed?

If I close a put position at a loss in an after-tax account and buy 1 share of the underlying in an IRA within 30 days, how much of the loss is permanently disallowed according to IRS wash sale rules? ...
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Rights vs Warrants vs Options

Why would a company issue rights instead of warrants (and vice versa)? Why would a trader or investor buy/sell rights instead of warrants or options (i.e. which situations make one of these more ...
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Fair value of common stock in stock options public company

I'm looking at $TOST 10k. When I go to page 140 it says this for their stock options: So you can see from the above image that they say their weighted average fair value of common stock was $17 at ...
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Please explain to layman — OCC Memo 50218, dated March 22 2022 — on VanEck Russia ETF (RSX) options?

I bought put options on RSX that shall expire April 1 2022. Obviously, I want to sell them for cash through my discount broker, Questrade, as soon as possible! I fail to understand anything in https:/...
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Options expiration dates: frequency offering?

I am starting in options trading and noticed that some underlyings have more options offerings in regards to the expiration dates; for example, SPY has Mondays, Wednesdays and Fridays weekly options, ...
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Why doesn't open interest for an option update throughout the day?

When viewing an option within an option chain browser/UI, why is it that open interest only updates day-by-day, yet volume is updated minute-by-minute?
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Do I need to worry about dividends when trading credit spreads?

I trade in the options market, mostly with vertical credit spreads. If one of my underlyings has a dividend coming up, does that affect my holdings? My guess is that the short and long position would ...
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Why can't I do an adaptive order on Futures Options?

Interactive Brokers has the ability to adaptive algorithmic orders that (I'm simplifying this greatly) can split the difference in the bid ask price without human intervention. I can do these types of ...
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How to calculate an annualized rate of return with a number of cash-secured Puts?

For cash-secured-puts I know how to calculate the annual return of a single one like: (Returns divided by Capital at Risk) x (365 divided by Holding Period in days) With a "wheel" strategy (...
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Is there any difference between placing a "buy & sell call option" & "buy & sell put option"?

I have attached two Options order charts. Max profit & loss are the same. But one (put) costs less than the other (call). Is there any real difference between these two orders? Is there any real ...
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Do I receive dividend if my stocks are assigned on ex-dividend date?

I owned a stock and sold a call option on it. On the Ex-dividend date the option was assigned at pre-market hours and stocks were sold at pre-market. Am I still entitled to receive dividends because I ...
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Covered calls that move in an in-kind transfer [duplicate]

When you move a covered call as part of an in-kind transfer does it go over as a plus or a minus to the amount moved in the transfer?
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IN KIND transfers that include covered calls

I have an RRSP that i transferred 800 shares to my taxable investment account along with it i transferred 2 covered call agreements each containing 4 contracts. When totalling and moving everything ...
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Futures Options: Options Expiration vs. Underlying Delivery

Does the expiration of a futures option always determine the delivery date of the underlying, in particular does the option always expire into the earliest-delivering futures contract? For example, /...
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3 answers
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Maximum credit exposure to Over the counter straddle

A trader purchases a six month over-the-counter straddle on stock A for a 1 Million premium from a counterparty. The maximum credit exposure over the life of the trade is: 1)less than 1 Million. 2)...
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Making a long put into a long put spread

Let's say I have a long put and it's Friday. I still think it has good potential to move down but I just want to be protected over the weekend in case the trade goes against me drastically because of ...
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What do I need to do to exit the wash sale so the loss would have been allowed?

This past year I started heavy day-trading of option contracts. I was aware of the wash sale rule... however when I received my 1099-B the wash-sale calculations are significantly different than I ...
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Tax treatment of underlying asset in 1256 options contract if exercised

I've talked to a tax professional but got a very uncertain answer and can't find any examples online, only examples are of the option expiring worthless rather than in the money. Example: 1 Bitcoin ...
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Long ratio put spread versus call strategy for stock of ABC company

Part(1) Long ratio put spread versus call strategy for ABC company Current market price:$639, view: moderately bearish Buy 2 February 630 Puts@ 35.00 Sell 1 February 660 Put@ 52.00 Sell 2 February 690 ...
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Is the strike price on the day when option contract is written equal to the price of the asset?

I am learning options theory and I am trying to understand how the strike price of an option is determined initially. Am I right that on the day the option contract is written, the strike price is ...
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1 answer
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Delta hedging of stock portfolio using options

In the aforesaid delta hedging of stock position, how was the delta of long stock computed by author ? In my opinion, total long position of 500 shares divided by the market lot of one put option ...
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3 answers
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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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1 answer
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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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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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1 vote
1 answer
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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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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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1 vote
1 answer
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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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2 votes
3 answers
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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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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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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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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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1 answer
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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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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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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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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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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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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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