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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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.
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-3 votes
2 answers
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Option trading strategies for buyers which really works [closed]

Is there any option buying strategies which work almost every time?
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3 answers
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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 ...
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'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
0 answers
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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 ...
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1 vote
3 answers
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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 ...
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1 vote
1 answer
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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 ...
0 votes
1 answer
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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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1 answer
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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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2 answers
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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
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.
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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 ...
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1 answer
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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 ...
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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 ...
1 vote
1 answer
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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 ...
1 vote
0 answers
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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 ...
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1 vote
2 answers
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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 ...
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0 answers
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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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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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0 votes
1 answer
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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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1 vote
1 answer
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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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1 answer
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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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1 answer
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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 ...
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 ...
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0 votes
2 answers
68 views

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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1 vote
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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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3 votes
0 answers
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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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1 answer
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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......
0 votes
1 answer
127 views

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 ...
0 votes
1 answer
57 views

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? ...
0 votes
1 answer
30 views

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 ...
0 votes
1 answer
100 views

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 ...
0 votes
1 answer
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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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1 vote
1 answer
20 views

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, ...
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?
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0 votes
1 answer
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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 ...
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 ...
3 votes
1 answer
76 views

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 (...
0 votes
1 answer
39 views

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 ...
4 votes
1 answer
80 views

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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0 answers
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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?
0 votes
1 answer
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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 ...
0 votes
0 answers
31 views

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, /...
0 votes
3 answers
59 views

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)...
0 votes
1 answer
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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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0 votes
1 answer
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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 ...
1 vote
0 answers
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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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0 votes
1 answer
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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 ...
0 votes
3 answers
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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 ...
0 votes
1 answer
34 views

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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