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.

2
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2answers
117 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
65 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
38 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 ...
1
vote
1answer
70 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 ...
0
votes
2answers
38 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, ...
1
vote
1answer
82 views

No margin account and put expires ITM

This question is a followup to a recent and similar question on buying a put: When a long PUT expires in-the-money, whose shares are being sold?. Suppose I don't have a margin account, and I buy a ...
0
votes
1answer
93 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 ...
3
votes
1answer
294 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
vote
4answers
117 views

Credentials to discern “Sell to Open” or “Buy to Open” Option Transaction

I am curious how to gain insight into whether an option transaction was buyer or seller initiated, ie. "Buy to Open" or "Sell to Open". What I am looking for is not from a common retail investor ...
2
votes
3answers
250 views

Where to find really good articles on stocks and general trading information? [closed]

Apart from this website, are there any other websites out there that are focused on trading and investing?. I am looking for a website where I can find articles etc on trading and investment - say ...
3
votes
3answers
144 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
3answers
167 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?
1
vote
1answer
48 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 ...
0
votes
2answers
54 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 ...
-2
votes
2answers
128 views

Should I replace some parts of my portfolio with an option strategy? [closed]

I want to increase the percentage return of my portfolio even though it's almost meaningless in the total amount, and I don't mind making it a lot more complicated. I have a few brokerage accounts, ...
4
votes
1answer
352 views

Is this the right formula to use implied volatility to gauge probability of a stock being within a certain range?

I read online somewhere, and I can't find it now, that to find the probability of a stock hitting a certain price within a certain time frame, we can use Implied Volatility: X = StockPrice * IV * ...
3
votes
4answers
211 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 $...
3
votes
3answers
91 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 ...
3
votes
3answers
81 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 ...
0
votes
1answer
63 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 ...
1
vote
3answers
181 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
1answer
76 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 ...
5
votes
1answer
1k views

Whats the difference between a qualified and an unqualified covered call?

I own various shares that I want to start writing covered calls on but I've heard about differences between "qualified" and "unqualified" covered calls. What's the difference? All I can find is that ...
3
votes
2answers
115 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 ...
1
vote
3answers
149 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?
1
vote
1answer
123 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 ...
1
vote
1answer
168 views

How much does the volatility change for a 1$ move in the underlying

Is there a quick and dirty way to approximate how much the volatility of an underlying would change for a 1$ move in the underlying. The individual option Greeks measure the sensitivity of an option ...
6
votes
4answers
12k views

How does a delta signify the probability of expiring in the money

I was watching this video on option greeks and the guy said (at 34 min): If an option has a delta of 34, it has a 34% probability of expiring in the money? Is it possible to understand it intuitively ...
0
votes
1answer
432 views

Estimate a future option price given greeks and a 1$ move in underlying

Let us say underlying is at 50$, and the 50 call is at 0.50. delta=0.5, gamma =0.5, theta = .02, vega = .10. I apologize if these numbers are not realistic, I am very poor at Greeks. My question is: ...
0
votes
1answer
266 views

Calculating greeks from given option information

I have some software that spits out information about an option. Strike, underlying information, etc, but I cannot get the greeks using this software. Given that these are American options, is there ...
2
votes
1answer
85 views

Equity vs Stock options?

I am a co-founder of a startup in the UK, the other co-founder wants to give me options instead of % equity because he believes when I eventually exit I will pay less tax and the company will too and ...
2
votes
4answers
90 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 ...
2
votes
3answers
74 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 ...
1
vote
2answers
52 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 ...
1
vote
1answer
61 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
40 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 ...
2
votes
1answer
205 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 ...
0
votes
0answers
25 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 ...
4
votes
1answer
98 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 ( ...
-1
votes
1answer
130 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
129 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
2answers
2k views

Option spreads in registered accounts

Are there any option brokers for canadian people that allow you to do credit and debit spreads in their rrsp and Tfsa accounts?
0
votes
3answers
139 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
264 views

Choosing a strike price when you sell a short combo

Often different stocks that I want to short are not on my broker's "easy-to-borrow" list, so they are unavailable for shorting. A couple weeks ago I got serious about option trading and I found out ...
1
vote
1answer
647 views

How many naked option contracts can I write if I want to use maximum margin

Let us say I want to write a naked option on SPX in my interactive brokers margin account. If this is the only position I wish to hold in my account, and I want to use maximum margin, then what is the ...
2
votes
2answers
218 views

Closing out a Short Guts position where the put side has 0 volume and 0 OI

This spread may not even be available after the holiday is over, but here's my question: I found a high paying high probability guts trade. If you don't know, a short guts is selling an ITM put and ...
0
votes
1answer
105 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 ...
0
votes
1answer
35 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
103 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-...
0
votes
1answer
51 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 ...