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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Option Volatility and Pricing : value of a stock option will also depend on whether a trader has a long or short stock position
Book: Option Volatility and Pricing
Chapter: Risk Measurement I
Topic: Change in interest rates can affect options
The value of a stock option will also depend on whether a trader has a long or short ...
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Types of options trading and which is more popular
For the average retail options trader do most buy options in the hopes of exercising it or do most buy options , resell and profit of the net of the premiums by doing so, much like buying and ...
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Hedging with options
Online when I see people talk about using options to hedge, they always seem to talk about it in the put options sense.
For example you buy a stock expecting it go up, but then just to be safe you buy ...
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why do people say implied volatility is a better predictor of stock price than the actual stock price?
why do people say implied volatility is a better predictor of stock price than the actual stock price changes itself (ie historical data etc), even though implied volatility comes from the options ...
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Question about offsetting options contracts
How exactly does offsetting an options contract work , for example if we're to go long on a call or put position in order to offset it i would need to short a call or put position, this eventually ...
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Can you effectively reduce the cost of a long call on an index with a synthetic long and married put (e.g. replicate an XSP call using SPX options)?
Imagine you want to use periodic cashflows to purchase deep-in-the-money LEAPS (>1yr expiration calls) on SPX, but the size of the cashflows are too small to do so consistently (the cost of such a ...
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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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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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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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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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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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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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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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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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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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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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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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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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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 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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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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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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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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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 ...
user122450
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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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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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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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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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How to trade European style option on Fidelity?
My goal is to sell European-style put options on TLT. How can I go about doing that on the Fidelity platform? So far I have been able to find an index that tracks atm putwrite strategy - PTLT index ...
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How is it possible to buy call options with a strike price below current market price?
I'm a newbie with all of this. I've been reading on call options and from my understanding, you're paying some "premium" to buy an "option" to buy the stock at a certain fixed ...
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What are alternatives to Black-Scholes model that doesn't assume random walk behavior?
I've recently started binary options trading as a hobby and I want to know how brokers decide the return rates on binary options. I asked this Question and I tested the model proposed in the answer. ...
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What are the main criterias of brokers when giving return rates on binary options?
I've recently gotten into binary options trading. I've tried multiple brokers like deriv, IQ options,Pocket options etc.
What I want to know is how these brokers give the return value for a winning ...
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IV applied to Buying Vs. Selling Option Contracts!
Is low IV (Implied Volatility) good for selling or buying options?
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Does Sell Call/Sell Put affect a share price
I am using a option flow provider that cost about $99 a month. Its filter by default only trigger on "Ask/Above Ask" for call & put , but Bid/Below Bid (namely sell call/sell put) is not ...
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How do you analyse components of Index option to help you get more accuracy while trading options?
Suppose, you trade in options, Option index comprises of Many stocks, so how do you analyse those stocks in order to determine the movement of price in options while doing intraday trading?
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How to Roll Put Options (Buy to open)? (Bought to Open)
I have a put option that I bought to open but the market has moved against me. So I'm looking for a way out of the contract other than taking a huge loss. I want to know my options for rolling them ...
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What is the benefit of scalping options on short intraday time-frames rather than trading large equivalent stock positions?
I see a lot of traders on fintwit (to name a few: @UmarAshraf and @RealNourAtta) using ITM or 40-60 delta OTM options to place quick day-trades on 1-5 min charts. They're out within seconds, minutes, ...
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Company options, price gone down but value gone up - is it a good deal?
This summer I signed a options deal with the company I work for that gives me the rights to buy shares 3 years from signing date. The deal is that I have to rights to buy X shares to price at signing ...
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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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How options affect the index?
I am not able to get technical/logical reason behind following scenario. Can you please help me to explain the reason behind it?
Context:
Group of stocks makes the index. It means Index is dependent ...
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Mathematically precise explanation of buying power
Can someone please provide a mathematically precise description of how buying power works in a brokerage account? Everything I can find online is too dumbed down to be precise enough that you could ...
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Are premiums from options taxable at assignment or sale of the security?
If I write puts that end up assigned, meaning I purchase the underlying security, are any taxes generated by the option in the year when it gets assigned? Are taxes only generated when the underlying ...
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Buying back a covered call ; did the tax law change?
Consider a situation where an investor owns a stock for over a year and sells calls against it that expire in about 90 days. You can assume that this is a qualified covered call for tax purposes.
...
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What happens to short PUT and short Call options on acquisitions. e.g Twitter
Currently Twitter is being acquired by Elon Musk. As now the deal is likely to go ahead. What happens to the seller of Call options ( suppose some one has sold call for $60 strike expiring in June ...
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Why did my put lose value overnight
I bought a put option yesterday 10/20/22 with a strike price of $26. The price of the security was at $28.00, and the expiration set for 11/18/22. The security price dropped to $20.00 overnight. Why ...
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Is there a way for me to benefit from a call option I bought before a reverse split even if I'm out of the money?
I bought an "option to buy" contract of [email protected] for a 0.10 premium. $60 breakeven for [email protected]. Unfortunately the company had a 1/15 reverse split and now my contract is for 6/100 @0.5. Which ...
