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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Buying call options without enough money to exercise [duplicate]
I'm starting to dabble with options and I bought the March 20 AAPL 330 call option for $5. AAPL is currently trading around $324 today. If I sell the call option today I will make a small profit on my ...
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How to Hedge delta and gamma of a put option simultaneously?
Say you took a short put position of 100 options (as you feel the option is undervalued). This put has a Delta of -0.5, so to make the portfolio delta-neutral you short 50 shares of the underlying ...
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Are bid and ask prices set by the market directly, or by the market makers?
I believe the answer is the latter, but I'm looking for more detail, hence the question.
For low volume stocks and options I have bid lower than the current bid, and while usually my limit order isn'...
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When a near term outlook on an asset is negative, is it possible to make money using both put and call options?
This question is about
Put options. These contracts give the buyer the right to
sell some underlying asset at some agreed strike price
at or before (American style contract) the expiration date.
Call ...
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Comparison between buying a stock and selling a naked put
Suppose one wants to invest in company X, whose stock is selling for, say, $100/share. What are the differences in profit potential between buying 100 shares and repeatedly selling a naked put at ...
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How does a delta neutral portfolio make money
This is a really basic question,so I apologise.
If I have a delta neutral portfolio consisting of an option and its underlying, such that any move in the option is cancelled by an opposite move in the ...
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Why do some symbols not have an Options chain for specific expiration dates?
In an attempt to generate income from holdings, I generally screen stocks that trade options regularly. In my research, I have noticed that certain stocks have weekly options - but not always. For ...
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What risk of a diversified portfolio can be specifically offset by options?
I have been reading articles on portfolios and options. It seems options are used to hedge portfolios for multiple risk factors.
I would like to know why options, and why not futures?
What is the ...
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What is a straddle?
I have heard the term straddle when referring to options many times. What would it mean if I wanted to enter into a straddle position?
user6570
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If you want to trade an equity that reflects changes in VIX, what is a good proxy for it?
If you want to trade an equity that reflects changes in VIX, what is a good proxy for it?
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Why are tradable option expiry dates not standardized across the market?
Many stock tickers have different option expiry dates. Some have weekly options available, others don't. Some have extremely long dated options available, others don't. On a very basic level this is ...
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If I am buying a stock why don't just I buy an in the money option?
I'm a 15 year stock market investor here who is very new to option trading (two weeks). I have a full understanding of how options work (complicated needless to say) and I have realized their ...
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Options Trading: How to lock in unrealized gains?
I've been learning about options trading, but the one thing I haven't explicitly read anywhere is how you actually lock in (i.e. cash out/collect earnings) from options trading.
Take the following ...
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Selling options to myself... which law does this violate?
If I sell a covered call from my IRA well above market value and use a separate account to buy the call, I've effectively added money to my IRA beyond the IRA's annual limit. (I can ensure I'm buying ...
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Option Price changes as you get closer to earnings (but stock remains unchanged)
How do the price of options change as you get closer to earnings, if the stock doesn't change?
Let's say, there's a call option that's worth $6.00 today for a strike price of $62.00 with the stock ...
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Inverted strangle
I am researching inverted strangles and feel like I’m missing something. Suppose I buy 100 shares of XYZ @ $50. I then sell one deep ITM call at $45 for $6, resulting in a $1 profit. At the same ...
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Options "Collar" strategy vs regular Profit/Loss stops
I just found out about the option "collar" strategy which is implemented with a long put and a short call. My understanding is that a collar limits the profit as well as the loss on the underlying ...
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How accurate is Implied Volatility in predicting future moves?
As I understand it, IV give the range the stock is likely to move within a year (to one standard deviation).
Is this accurate? Are there any studies showing the accuracy or lack there of IV?
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How does a limit order work for a credit spread?
In the stock market, a limit order goes in the order book saying Someone is willing to buy 5 shares of this stock at $5.
I understand the same would be true for an options order at a particular ...
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How does delta and gamma change in relationship to distance between strike and underlying price?
Would be great if someone can provide a graphical explanation to show changes in gamma and delta as price goes toward in the money and away as further out the money. Are there differences that I ...
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Fill price above my ask - how is that possible?
I had tried to sell my GDXJ options @ 12.80, I saw there was a fill at 12.95 but none of my options were sold. When I called the broker they said option spreads are given priority. I can understand if ...
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Buying & Selling Call Options
So, I understand that if I write a call option and someone decides to exercise it before it expires, I agree to sell them the stock for the listed price on the option.
I guess my confusion is, if I ...
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Execute or trade an options contract?
Take this call for example:
FIO Jan13 22 Call
Let's say this Thursday the stock goes to $23. Here is my math:
Cost of option: $35
Cost of stock bought at $22: 100x$22 = $2,200
Thursday price of ...
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What rules govern when a new option series is issued?
As I'm typing this, the CBOE quotes and data page lists GOOG and FB options with expirations of September, October, November and December of 2012. But AMZN and GS only get September and October of ...
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What are Binary Options?
What are binary options, what can they be traded on and what is the process in trading them?
Also, are there any brokers in Australia who offer binary options?
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How can I figure out when I'll be able to write call options of a stock?
I have a 200 Zynga shares. I'm wondering when I'll be able to write call options?
I see Groupon has options on it, but Pandora does not, so it seems it must not be just time.
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Can a loss on the sale of my house offset capital gains tax from stock options?
I've lost a bunch of value on my primary residence. I've got a bunch of vested stock options that, when exercised/sold, will be a substantial capital gains.
If I sold my house the same year I ...
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Calculating fair value of an oanda.com box option
How do I calculate the theoretical "fair value" of an oanda.com box option?
More specifically, how do I calculate the probability that a given
FOREX parity will enter a given range in a given period ...
user1731
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Significance of the word iron in option strategies
Why is the word iron used in some of the option strategies, like iron butterfly or iron condor ?
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How to calculate the relationship between a long put and a long call with the same strike price
I have noticed that, a lot of the time, long put and call options have different prices even if they are the same distance from the strike price (lower and higher respectively). Is there a name for ...
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I sold call options that expired ITM. Why were they not exercised?
I sold two covered call positions that expired Aug 9. Both expired ITM.
The 1st one's strike price was $3.00. At expiration, the stock was $3.13 so 13 cents ITM (6 contracts).
The 2nd one's strike ...
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Are there any other benefits to exercising EMI stock options straight away vs. as late as possible? (UK)
Once my options vest, according to the EMI scheme I have ten years to exercise them.
I'm weighing up the pros and cons of exercising exactly at the point they vest versus leaving it to the last ...
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Put Option Payoff Replication (Dynamic Hedging)
We know that we can use the below equation in the link to replicate the payoff of a call option using stocks and bonds.
I am wondering what the equation would look like for a put option instead. In ...
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Selling Covered Calls, will online broker sell shares automatically?
Let's say I own a share of a company at $100, and I sell a call option for this company for $5 with a 6 month expiration, and a strike price of $110 (all arbitrary numbers). If the share price rises ...
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How to find out if an option is of american or european style?
I am pretty new to Options. How can I find out if an offered option is of "american" or "european" style?
Can I assume that an option which is traded e.g. at EUREX is of european style?
Thanks in ...
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Is IQ Options trading on companies like Apple or Facebook Illegal in India?
I'm asking this question because, I know that FOREX Trading in India is not legal, so is it legal if we trade options on companies like Apple or Facebook using IQ Options or Expert Options or ...
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Price of a call at expiration
I have a covered call that is going to expire in 15 minutes. It's $1.30 in the money. I'd expect with no time value left, the price to equal the intrinsic value ($1.30). However, it's still valued at $...
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Is it commonly possible to buy an "Option for a Mortgage at a specific Interest Rate"?
I'm newer to investing, but I've come across options contracts now and then which to my understanding allow the option to buy or sell a stock at a certain price.
After a discussion with a coworker at ...
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Is there an academic framework for deciding when to sell in-the-money call options?
I've been buying 1-year at-the-money call options on various stocks as a way to increase my leverage.
I almost never regret selling them once they are up 40%.
There are many times when they've been ...
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a "fully" American option strategy?
Is there such a thing as an American butterfly spread?
For a European butterfly spread simply buying 1 put with strike price X+a, 1 put with strike price X-a and shorting 2 calls with strike price X, ...
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Profits vs. losses from stocks, options, and futures: separate, or combined?
Are stocks, options, and futures all considered part of the same basket for tax purposes?
E.g., if one make some profits on stocks and losses on futures, does the IRS allow one to deduct the losses ...
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What happens to options after a stock split?
If an underlying stock splits, are the options just adjusted accordingly (i.e. quantity I own is multiplied, and strike price is divided)?
For example, AAPL will have a 7 for 1 split soon.
If I have ...
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Short position with bullish outlook
I am just starting to learn about options and about puts and calls.
Traditionally, I assumed that being short on a position means having a bearish outlook to the market.
However, when you are an ...
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Options price vs implied volatility - who drives who?
In this article we have:
In contrast, IV is derived from an option’s price and shows what the market “implies” about the stock’s volatility in the future. Implied volatility is one of six inputs ...
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Looking at Options Liquidity: what makes some stocks so attractive for options traders?
I've noticed that options volumes can vary dramatically between underlying securities.
What makes some stocks (e.g. AAPL, BAC) so attractive for options traders?
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Can heavy demand for options drive up or down a stock price?
I understand the market maker is the one quite frequently on the other side of my buy or sell option order (to make sure their is liquidity in the market, and offering the bid / ask spread as "...
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Where to find LEAPS option quotes (full chain)? CBOE & Yahoo! Finance not working
It appears that most sites that give stock option quotes are broken. I'm trying to get a full chain for 3M (MMM) in Jan 2012. I tried CBOE and Yahoo!. CBOE doesn't even show the LEAPS. Yahoo! ...
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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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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 (...
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Who are the non-speculative buyers of futures options?
I am trying to understand who would be a non-speculative buyer of options contracts on futures. There are a plenty of descriptions of how options work online, but mostly they omit this crucial part of ...
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