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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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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2 answers
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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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Can companies raise cash by selling covered call options on their treasury stock?

Suppose a company has lots of treasury shares. Can it raise cash by selling call options covered by the treasury stock? If the stock price ends below the strike price of the calls sold, then the ...
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Stock Options in Exchange for Salary

I received an offer letter with with the option to convert part of the salary to stock options as per the below table. Base salary is ₪33K/month (Israeli Shekel). Be aware of '₪' vs '$' in some ...
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Reporting of 1256 Based Options

I live in the United States. In 2015 I have traded several 1256 based options. The details of each trade were not included in my 1099 and not imported into Turbo Tax. I understand that this is to be ...
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2 votes
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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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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 ...
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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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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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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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How will the probability change with new restriction(Red Zone)

If I sold an OTM put option(-16 delta) the probability of touching the short put strike is 32%(i.e 2*16). The risk profile is represented by the picture above. How can I calculate the new probability ...
1 vote
2 answers
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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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0 answers
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Where Option Credit gets added

I have a question, when you sell options (call or puts) you get credit upfront, but my question is where you can see these credit amounts? In "Stocks & Options" or in "Brokerage ...
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Non-US citizen/resident trying to begin trading options and futures

I'm from Brazil and I already trade shares, options and futures here for ~5 years in the Brazilian stock market. I began trading shares in the US stock market a few months ago using the Passfolio ...
1 vote
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Is it possible to see market data for options trading?

Is it possible to see market data for options trading, i.e. that shows all placed option orders? Some brokerage platforms provide "level 2" order book information of all placed stock orders ...
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Does selling a related option affect the holding period for tax purposes?

Imagine the following scenario: I purchased 3 LEAP call options on XYZ in 2019 with a strike price of $200.00, expiring over a year from purchase in 2021. I also sold 3 call options on XYZ in 2019 ...
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1 vote
1 answer
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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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Settlement Period for options pre 1993

I was reading Settlement Period and wondering what was the settlement duration for options pre 1993. For equity/etf, it seems it was five days. So for options, was it four days ? , any verifiable ...
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Warrant extension - would this have any tax implications?

If someone has warrants to purchase shares in a private C corp in the US, if they were about to expire and they got the company to agree to extend them, does this have any tax implications? These are ...
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Computing risk-neutral probability of spot rates

I am trying to use a binomial model to price options wtih bonds as the underlying security.If the current term structure is flat at 6%, but next year, I assume the one-year spot rate will be either 5% ...
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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 ...
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1 answer
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FX options for retail trader

I would like to trade options on the FX market, say EURUSD and GBPUSD. I have seen that there are options on the CME that have FX futures as underlying and also some options on spot on the ...
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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 ...
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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 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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1 answer
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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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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
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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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 ...
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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, /...
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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 ...
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1 answer
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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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Calculate options prices based on given options and spread prices

Suppose you know the following information: Futures price on a stock is 66 70 strike straddle is trading at 27 50-60 put spread is trading at 2.5 50-60-70 put butterfly is trading at 0.2 Assume ...
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European Option prices with dividends

I have a question about how dividends affect the price of a European option. I understand that because the stock price is expected to drop after the ex dividend date this causes the price of call ...
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Special Case of European Option Prices

In class we discussed the special case of where the other price on a longer term to maturity option could be less than the shorter if there is a dividend and if each option expires the day before and ...
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Sold to close options and Robinhood charged $0.04, but why and how?

This morning I BTO'd 5 call options for $30 and an hour later STC'd for $70, a $40 profit. Robinhood took $0.04 on that STC order, but I can't reason about how or why? Their fee schedule says that its ...
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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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Difference between trading ETFs and the corresponding futures? GLD or /GC? UNG or /NG?

I am taking a hard look at options trading and I am starting with a modest account of $10,000 (I mention this because I think it might be relevant to the question). What is the difference between ...
0 votes
1 answer
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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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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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Is there charges for unfilled option

I failed to get filled on an option trade and was canceled. Will I be charge a fee still or only when an order is filled? Thanks.
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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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1 answer
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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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1 answer
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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?
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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 ...
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Price of a Call Option as you Increase the time periods

I'm pricing call options at the moment and seeing how call option prices change depending solely on the periods of volatility. In one case the stock changes every month, the other it changes every ...
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Order rejected: Today's expiring option series on this symbol are Closing Only

Rejected Buy to Open 1 Order rejected: Today's expiring option series on this symbol are Closing Only. TDA gives me this response when I try to buy 1 call option OTM The volume and open ...