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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Can you trade options with market scoring rules?
In a double-auction market, buyers and sellers are always balanced in number -- a traditional market-maker in such markets doesn't really hold any assets/take any position long-term.
However, with a ...
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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 ...
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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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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 ...
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References/terms to search for regarding financial instrument universe selection
When attempting to profit off of the market in one way or another, an entity, be it a fund, individual investor, institution, etc., must first decide on what actual financial instruments are to be ...
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Is Implied- and Historical Volatility based on solely Business days?
I'm trying to compare historical and implied volatility for different stocks. Still, since I can't tell what these numbers are based on (for historical volatility) and referring to (for Implied), I'm ...
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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 ...
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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 @ ...
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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 ...
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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 ...
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Do compound options trade on exchanges or do they only trade over-the-counter?
Do options on options (i.e. compound options) trade on derivatives exchanges? Or are they only traded over-the-counter? If they do trade on exchanges, which exchanges do they trade on?
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Availability of proceeds from the exercise of a long put
If I bought a put option in a cash account, it expired ITM and was exercised automatically on Friday, could I use the proceeds on Monday or would I have to wait T+2 working days until Wednesday for ...
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Shorting a company's stock after leaving
If a person just generally thinks a company is poorly run and decides to quit, would shorting the stock count as trading on non-public material information? If it's not based on any specific piece of ...
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How to calculate break even price of Bull Put Spread and Bear Call Spread
I need some help confirming if I am calculating the break even price correctly for both Bear Call Spread and Bull Put Spread.
For Bear Call Spread, I have:
breakEvenPrice = longLegStrike+(longLegCost-...
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DOW Mini Futures Options Liquidity - Symbol YM
I am trading on the Interactive Brokers TWS platform. That is the name of the broker and the platform they offer that I use. I have noticed that there is almost no liquidity on the YM Mini option ...
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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. ...
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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 ...
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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 ...
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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 ...
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Is there likely to be a market for private company incentive equity if it's assessed value is more than it's worth?
Let's say I have some stock options in my company that I can exercise for $x. And the company's value has been assessed by some external entity to revalue the stock to $x+y. The company is still ...
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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=...
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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 ...
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How to properly hedge indices futures NQ by selling leveraged index options TQQQ or SQQQ?
Is there a formal futures NQ vs TQQQ options contracts hedging ratio calculation/strategy to tap on the fast decaying value of weekly expiry TQQQ options thereby creating an asymmetric risk-reward ...
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How to compute IVx (Implied volatility for a specific expiration) and the expected move with options?
By searching online, I have found three methods to compute the expected move of a stock based on option prices and implied volatilities:
Method 1: Extract the price of a Straddle ATM of the front ...
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Deducting option trading losses for income tax filing
I am in India. Let's say I have an income for 25 lakhs and my losses in option trading for 10 lakhs. How to file ITR for the same? Will my losses in option can be carry forward for 8 years?
Suppose I ...
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Working around IRA contribution limits using options
Lets say I have a taxable brokerage account with $1k of shares for ABC. I'm reasonably sure ABC will go down over the short term but don't want to sell it so I buy puts.
But since I just opened a Roth ...
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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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ITM option exercise immediately after buying on E*Trade
I bought a put option with strike 453 for 3.23 per share with the current underlying price at 448. This means that I should be able to exercise immediately and make 1.77 per share profit. I’m using ...
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What happens to SIVB put option holders?
As title implies - I own put options (Strike Price $125, exp. March 17 2023). I am wondering what happens to other owners of put options.
As we all know now, SIVB is in receivership. I do not own ...
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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 ...
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Option Theta: What conditions are needed for Theta > P/N, where P = option price, and N = days to expiration?
The wikipedia definition for Theta is:
And people frequently refer to the picture below, to show what typically happens with an option's value as a function of time; we can note this is non-...
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Comparing option deltas of significantly different underlyings
Please help me correct or confirm my intuition about options deltas. My understanding is that delta is the change in an option's price given a $1 change in the option's underlying. Moreover it's ...
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How to price this contract in this scenario?
Here is the question:
You want to sell a painting you inherited from a grandparent. There is a 10% chance it is painted by a famous artist, in which case it's worth 100k. There is a 30% chance it is ...
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If each option's strike price has different implied volatility what does IV means?
After spending 2 days researching I realized not many people know how to answer this, and most answers going around and not direct.
I know that 20% implied volatility means 1 standard deviation ...
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Are two options ever too similar for taxes?
If I buy an option, wait 3 months, sell it, and then buy it back the next
day, "wash sale" rules will apply. But, what happens when these three
actions use slightly different options (e.g., strike ...
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confusion about gamma and gamma portfolios
Generally, a long gamma portfolio will make money when the underlying:
(a) out-realizes the historical volatility (measured close to close)
(b) out-realizes the implied volatility (more than making ...
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Breakeven for debit spread
How are the Max Gain and Break Even calculated here on Fidelity?
I thought the breakeven would be the strike price of the long call plus the net debit: $16 + $6.03 = $22.03
And the max gain would be ...
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Option trading to avoid overnight fees over a short position
I do a lot of short selling as a day trader. There is a pattern that I trade often. This one asks me to short and keep my position for several days. The problem I have is that the broker charges too ...
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How do Short Vertical Spreads work exactly?
I wanted to get into options trading and have been watching a couple of tutorials.All was well until I hit short vertical spreads.I used skyview trading resources for this.
https://www.youtube.com/...
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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%...
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Thursday morning open interest data for newly listed weekly options
The open interest data is available for the newly listed weekly options during the market hours on Thursdays. Yet the open interest data supposedly gets updated once per day after the market close. ...
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Why are so few options ever actually exercised?
What is the reason that only a minor percentage of options get exercised (17%, I read on the OIC website)? If on expiration, the option is in the money, it will be either automatically exercised, or ...
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Why call options are more profitable compared to stock trading?
I am having a hard time trying to understand why buying call options are more profitable (if you predict the market right), compared to selling & buying stocks right away. Let me explain my ...
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Profit gained by exercise and selling of incentive stock options
For the below mentioned scenario, I want to know how much profit I will make if I sell all my options. I am new to the world of stocks, and any help will be greatly appreciated.
My company has granted ...
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On the meaning of Delta hedging
Basically, I'd really like to give a natural interpretation of
as prescribed by the Black-Scholes model for European derivatives, where O(t) is the option price and S(t) is the price of the ...
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selling covered calls below my average cost
I have this stock more than 2 yrs and wont go up , I am planning to sell covered calls all my shares just to return my capital ... example my average cost is 5 and I am planning to sell it at a strike ...
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Clarification on SELL PUT in Options trading
There is a stock currently trading at $.64.
If I go to options I can do a sell put for $7.50 and then a buy put for 2.50.
Robinhood tells me I get a premium of $470.00 ($.47) and my potential profit ...
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Which expiration date and strike price gives the highest delta theta ratio & leverage?
I want to gain exposure to the underlying portfolio (long some stocks, while short some stocks) using options. While I have limited cash for margin, so I have a hard time figuring out the exp date and ...
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Short selling options, can brokerage force seller to buy back the options
In case if I short sell ETF or stocks, brokerage can ask short seller to cover the position even if the user is paying interest and is within margin limit.
With this question, I want to know in case ...
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How does buying put orders on robinhood work if you purchase after hours
Here is my current scenario:
I bought a put option for 390.00 on 03/09 after market close, the status is still set as queued
I see now that the aftermarket price is 390.06
If after market goes below ...
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