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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3 votes
2 answers
147 views

Is there limit on number of Covered Calls Transactions?

I have 100 shares of XYZ. I felt today it’s going to be Bearish Trend, so I opened a position, STO call at $10.00 (2 Weeks Expiry). Next day premium value is $5.00 and it’s going to be Bullish again. ...
12 votes
9 answers
4k views

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 ...
1 vote
1 answer
1k 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 ...
2 votes
2 answers
567 views

Why are there no exchange traded options on 3x leveraged ETNs

Since these would help me manage risk in my personal financial portfolio, why are there no exchange traded options on 3x leveraged ETNs? Is there a prohibition that the SEC is perpetuating? Is there ...
0 votes
1 answer
227 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 ...
-4 votes
0 answers
55 views

Why option trading were born or does we use option trading in daily life [closed]

Why option trading were born. what is the real life example of option trading (not stock market). Do we use option trading in real life.
5 votes
2 answers
21k views

Can the purchaser of a stock call option cancel the contract?

Let's assume there's a company, XYZ, trading at $11/share today. I purchase a call option @ $15 for $0.05. Do I need to keep funds in my account to satisfy the contract? I know my counter party ...
1 vote
1 answer
70 views

How option writers influence share price

How do the option writers influence share price? I have heard about short covering but it happens only in FNO how can it help the stock price to up since the shorts are built in FNO and its derived ...
2 votes
2 answers
140 views

Stock Trading Question - Covered Calls

My understanding of covered calls is that if I sell call options for a stock that I own and the price of the stock rises, I would have to sell my shares. What stops me from putting a limit buy order ...
-3 votes
2 answers
63 views

Option trading strategies for buyers which really works [closed]

Is there any option buying strategies which work almost every time?
0 votes
1 answer
55 views

Short options trade ITM assignment criteria

Can someone please explain something about the option spreads? How come this broker is not exercising these short options in this video as they are deep in the money? https://www.youtube.com/watch?v=...
0 votes
3 answers
133 views

How can option seller lose unlimited money?

I hear that option seller can lose unlimited money, but how can option seller lose more than he deposited as margin? Does he only lose the margin he deposited to sell option or unlimited? Please ...
0 votes
1 answer
422 views

How not to pay taxes on covered call

I bought 100 shares of ESPO four months ago for $50 and sold a September 18 $62 covered call at Robinhood. With the stock trading at $61.50, I think that it's likely that I will be assigned. I will ...
0 votes
1 answer
34 views

How to estimate or determine leverage from strike price on ITM call option?

In this text 4x leverage is mentioned: "ITM call options have a strike (X) below spot price (S). ITM call option position is determined by aiming for ~4x leverage. The position size is set at 33%...
0 votes
1 answer
33 views

How to calculate break even price on delta hedged portfolio?

The underlying currently trades at 10. Suppose you have a portfolio consisting of: 1 Call at strike 11 with premium 0.4 A short position of 25 shares Calculate the break even prices of this ...
2 votes
2 answers
14k views

Does the wash sale rule apply when rolling options spreads?

If I short a spread and roll it over the next month at a profit, does the losing leg carry over to the new trade? Example: Short 1 January PUT $200 Strike +$100 Long 1 January PUT $150 Strike -$30 ...
0 votes
0 answers
33 views

'Inversion' of option chain: calls are more expensive than puts above the strike price! GME

Over the past two days there has been a weird phenomena on GameStop's options where the call options are more expensive than the put options above the strike price. I would have imagined that some ...
0 votes
1 answer
121 views

is mark to market accounting has to be FIFO?

I am thinking to file for the mark to market trading account but I do not like FIFO. Is FIFO part of mark to market accounting?
1 vote
3 answers
83 views

How does inflation affect options prices?

Does inflation have any effect on options prices? If inflation increases, what will happen to the prices of puts and calls? My guess is that higher inflation will lead to higher interest rates, and ...
0 votes
1 answer
61 views

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 ...
0 votes
0 answers
19 views

Understanding the Call and Put options premium change wrt base index for morning 5 minutes

I was watching the graphs for call and put Nifty options for the first 5 mins for the date 29 Aug, 2022. What I noticed is that even though the Nifty 50 index chart for the first 5 mins was doji ...
0 votes
1 answer
134 views

Thoughts on this wash sale scenario

I traded options and believe had several wash sales. Does it matter if they're puts or calls or sell to close or expired? Is it possible they're not wash sales as wash sales are not indicated on my ...
1 vote
2 answers
548 views

Borrowing share with a covered call for short?

I was wondering if I could increase the premium from my long term hold by providing them to my broker as a short sale stocks? My main question is that are there any implication on the fact that I ...
0 votes
1 answer
42 views

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?
1 vote
1 answer
9k views

Why does selling covered calls result in a negative balance in my account?

When I sell covered calls I see the balance that I was paid (the premium) represented as a negative number under the "options" section of my balances. Why? It makes sense to me that the ...
0 votes
2 answers
106 views

May I get more than the strike price difference when roll up an ITM call option?

I have an in-the-money call option that expires shortly and I see further upward potential of the underlying stock, so I decide to roll over to a longer expiration date. Now, if I choose to roll up to ...
0 votes
1 answer
61 views

What's the negative about buying contracts 1 month out when scalping options? (Is it buying same day or 2-3 day contracts are way cheaper?)

What's the negative about buying contracts 1 month out when scalping options? (Is it buying same day or 2-3 day contracts are way cheaper?) I don't want Theta to negatively affect my gains.
0 votes
1 answer
130 views

Adjusted Options (uncovered short puts) on Expiry

I sold 35 short puts (adjusted options) each for $1.30 premium a month ago. CHKA1 07/17/20 Put, Strike price $1.50, Underlying symbol: CHKAQ (formerly CHK) After CHKAQ went bankrupt and currently ...
0 votes
2 answers
79 views

About getting out of a long PUT option trade

I think about making my first options trade and after studying a bit, I couldn't find answers to some of my questions. So here I am. What I want to do is buy a PUT option on a stock that I speculate ...
0 votes
3 answers
97 views

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 $...
6 votes
4 answers
16k views

How do you calculate the rate of return (ROR) when buying and selling put options?

How do you calculate the rate of return (ROR) when buying and selling put options?
1 vote
4 answers
5k views

Is an iron condor always preferable to doing a simple credit spread

What is the advantage of using a regular credit spread (bull put or bear call spread) over an iron condor? The minimum profit for an iron condor will be at least the same as a simple credit spread (...
1 vote
2 answers
216 views

Covered call selling and wash sale or potential IRS problems?

I have a stock position that went south really quick and I have been holding on for about 5 months now. My last average down was 4 months ago. My average price is $12 and the stock is currently ...
1 vote
2 answers
112 views

will my brokerage account receive some stocks after someone exercises put options that I wrote?

I have some basic knowledge of how options operate. I have limited practical experience buying calls, and puts. I never tried shorting options, and before doing so, wanted to clarify some basic ...
0 votes
2 answers
166 views

How to calculate the number of trades in the market?

Is there any way to calculate the number of trades in an options contract, if the following data is available- Volume Open Interest Change in open interest Underlying Price Implied Volatility Total ...
0 votes
2 answers
217 views

What is the effect of a short stock position on the value of an option?

I'm reading the book "Option Volatility and Pricing" by Natenberg and there is a paragraph I'm having trouble understanding. Chapter 7 (Risk Measurement 1), Page 98, Paragraph 2: The value of a ...
0 votes
0 answers
64 views

Why IV are moving opposite to each other?

Please refer to the figure below, the graph is of European-style options of call side IV and put side IV at the same strike and same expiry. The graph is not of some stock but of an index. Also, this ...
0 votes
1 answer
118 views

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 ...
0 votes
1 answer
49 views

What effects does a change in IV on the call side have on the put side?

In a European type options market, consider this scenario, where someone starts to buy call options very aggressively which increases call IV rapidly. At the same time, the underlying price remains ...
1 vote
1 answer
54 views

Why do implied volatility changes at different strike prices exactly coincide with one another?

Please see the image of the Implied volatility of different strike prices separated by 100 points. This is the recorded data of the actual market. As it can be clearly observed that the Implied ...
0 votes
1 answer
49 views

How does expiration/assignment work in synthetic covered call

What happens if I let a short call expire worthless on a synthetic long stock I've purchased. Here's my scenario. Bought a CALL @ 870 and sold a PUT @ 870 both expiring in 177 days. Also sold a CALL @ ...
0 votes
1 answer
138 views

Selling short call against a long call (a LEAP) when the long call is already in profits. Is it Constructive Sale?

Let's take these hypothetical trades On 08/01/2020: Bought AAPL Jan-2022 100C at $30 (Long call) On 08/30/2020: Sold AAPL Jan-2022 110C at $50 (Short Call). By this date, 08/30/2020, before my short ...
1 vote
0 answers
77 views

What option Greek is responsible for this?

Suppose you’re day trading and the underlying is going up. You have a want a put though as you think it’s going down long term. If you bought a 0DTE put, and the underlying moves in the opposite just ...
0 votes
0 answers
39 views

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. ...
0 votes
1 answer
298 views

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:/...
0 votes
2 answers
199 views

Stop limit orders are being filled immediately

Got an option trading up at $0.40, spread is $0.34B x $0.45A, so I went to set a stop limit on the order at $0.35, but the broker popped up a message that said: "Your stop price is at or above ...
0 votes
0 answers
32 views

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" ...
0 votes
2 answers
158 views

Long term LEAPs with calls written against them

I bought 3 LEAPs on XYZ at various times in 2019 which all expired in 14-17 months. I intend to sell or donate them once they reach long term status. However, I also wrote 3 CALL options on XYZ that ...
1 vote
1 answer
156 views

Calculating maximum loss on options spread including early assignment and margin calls

Most trading platforms provide a maximum loss calculation for options spreads, but this does not account for the possibility of early assignment which could lead to losses from margin calls, overnight ...
0 votes
1 answer
88 views

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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