Questions tagged [put-options]

This tag is to be used for any question on put-options. i.e. an agreement or right to sell a stock or commodity at a specific price. Related tags [call-options, options, options-assignment, option-exercise] should be used when appropriate.

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33 views

Are funds securing short puts in a cash account considered settled for free-riding?

For cash-secured put writing, I have enough cash in my account to cover the put if it is exercised. Is there a special category that this cash falls into with respect to free-riding? Say I wrote a $...
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2answers
162 views

Selling options below bid on Robinhood

If you sell an option for cheaper than what is someone willing to pay, does Robinhood sell it for the best price or for the price you chose to sell it? I'm trying to figure out if I can do stop loss ...
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231 views

Trying to get my head around how options work

A stock X is trading at $215. I bought a put at a strike price $195 for $2.55 premium(paid $255) expiring June 7. Today the stock is down by $15 to $200. However, the price of my put is reduced from $...
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1answer
43 views

Currency option case

I am a bit lost with understanding the naming used for holding positions in the currency options and their payoffs. If I want to buy the European option with an amount of x USD (EUR put/ USD call), ...
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1answer
84 views

Why is the Strike Price so low on some Puts

I am using Robinhood and looking at buying a put for BYND. The current stock price is around $93.00, but most of the puts I find have a strike price in the $40's. I can't find anything with a ...
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3answers
153 views

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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1answer
41 views

payoff at expiration of a protective put

Hello the question I was asked was What is the payoff at expiration of a protective put (a portfolio consisting of one share of stock and one put option on that stock with strike price K) if the ...
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1answer
104 views

why some brokerage does not allow uncovered (cash secured) put via online order?

In past, I had brokerage accounts with Vanguard and I have option level approved for writing uncovered put( Level 4). I could place covered call orders via the website. But to place uncovered put ( ...
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1answer
38 views

What Happens to OTM Puts Following a Cash Aquisition?

Say I purchase OTM puts with a $5 strike and the underlying company is acquired through a tender offer that pays $19.00 cash per share. My contracts are accelerated and adjusted to reflect the new ...
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3answers
130 views

Crash O Phobia and the reason for higher pricing of out of the money puts

In my stochastic finance course we are currently talking about Implied Volatility and Crash O'Phobia. According to Rubinsteins Crash O'Phobia, put-sellers attach a higher probability to the left tail ...
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3answers
140 views

Starting with options trading

I am a regular trader with stocks but I am a complete beginner with options. I am referring to a few online resources like here and here However, I have a few questions. Say I call a stock at $50 ...
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1answer
102 views

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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134 views

Are buying puts valid portfolio protection?

Any article you read on buying puts for downside protection always walks through the optimal outcome. It goes like this: You buy cheap puts, the market declines before your puts expire and you have a ...
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56 views

Arbitrage strategy for a given put option price

Binomial Option pricing model question In the following question, S0 = stock price at time t = 0, u = up factor, d = down factor. r = risk free interest rate. Stock price at time t = 1 is either S0*...
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40 views

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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2answers
111 views

What kind of stock option (European, American, exotic) is more popular? [closed]

I would like to know whether investors tend to prefer European, American, or exotic (aggregation of several options) stock options, either put or call. I also would like to get an idea of the relative ...
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1answer
29 views

Present value of exercise price & call-put parity

Call-put parity looks as follows: [value of call] + [PV of exercise price] = [value of put] + [share price] *from Brealey, Myers, Allen "Principles of corporate finance" Take an example: share ...
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1answer
85 views

Are there any mutual funds tracking equity index put option writing?

Put option writing on equity indices (like the S&P 500) can be a strategy to pick up some small premiums in a rising market while buying some slightly discounted positions in the index during ...
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2answers
125 views

How does share consolidation impact options?

Kinder Morgan Canada did a share consolidation that took effect today. I see there are still options out there that reflect the unconsolidated price. Would someone buying the put option after the ...
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2answers
47 views

Time value on puts close to expiration

Let's say it is Tuesday and a 75 strike, monthly put expires Friday. Its bid/ask are .30 x .50. The current stock price is 79.86. Implied volatility is 61%. Delta is -0.15. Why is the put so elevated ...
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1answer
75 views

Is legging into bull credit spread a good strategy?

Let's say I've written at put at 50 (naked put). The stock price has come down from 57 to 52. I want to reduce my exposure. Is buying a put and creating a credit spread a good strategy for this ...
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1answer
42 views

Is all of put option time value when OTM?

If I sell a Dec 65 strike put on 12/3 and on 12/7 the stock price is at $74 and the put bid/ask are .35 x .37, how much of that is time value?
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2answers
102 views

Understanding the technicalities in options (put example)

My goal is to use options on a speculations level. I'm a bit perplexed with what I see on the broker account and thought this will be a good place to post my questions. So, here a fake-scenario (...
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1answer
1k views

How urgent is it to close put options when a company enters bankruptcy? How likely is it to have trading halted?

I own Jan-2020 put options on a company in bankruptcy, but the stock is trading between .25 and .50 and my limit orders to sell those puts are not getting filled yet. The trading on the shares has ...
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1answer
459 views

Risk of selling stock cash secured puts and covered calls

I'm trying to determine what the potential downside is for selling call and put options, aside from the obvious loss of money if the stock moves past the strike price of the call or put sold. Right ...
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3answers
82 views

If an in-the-money put option is not exercised by 4 p.m. ET on the expiration date, does it become worthless?

If an in-the-money put option is not exercised by 4 p.m. ET on the expiration date, can the shares be assigned to the seller of the put option, or does it expire worthless?
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203 views

Does option delta predict expiration probability?

I've read that delta is a probability of option assignment. For example, if you have a put with a delta of -.70, there is a 70% chance the option will be assigned. If the delta is -.04, there is only ...
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2answers
411 views

Why doesn't cumulative call open interest and cumulative put open interest inform future stock directionality?

For example, how come the ratio of total puts and calls doesn't accurately inform of the stock's future movement?
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2answers
493 views

What happens to a PUT contract for a company that is sold above the strike price and before expiration?

I'm thinking of selling long dated put contracts for a company that I believe may be acquired before the expiration date. I'll use SNAP for my example. What would happen to in the following situation? ...
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1answer
69 views

Insuring against a drop in ETF using Put option

I am new to finance, markets and various financial securities. I just started with some Khan Academy Videos and Udemy courses. Our professor introduced the concept of using a Put Option to establish a ...
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2answers
97 views

Profit from a decline in a sector

I know that put options are "safest" bet when anticipating a stock to decline. But what of a sector, say energy, to decline over a long period of time (> 1 year). Are there additional options ...
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2answers
58 views

Trading a Bull Put Spread when broker does not offer multi-leg orders possible?

Lets assume I would like to trade a Bull Put Spread on a stock from which I think it will go up moderately. I therefor buy 1 OTM put & sell 1 ITM put option, both having the same expiration time....
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2answers
1k views

Delta hedge a put option without a long position on the underlying stock

I'm fairly new in this field so if I make a mistake please correct me. I have a beginners question about hedging. The delta of a put option is always negative so to delta hedge a put option I would ...
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1answer
32 views

Understanding Put Warrants on SET (Thai) exchange

I have having trouble understanding exactly how these derivative products work. For example this one. I understand that the European exercise style means that they can only be exercised on the ...
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1answer
93 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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2answers
111 views

When a long PUT expires in-the-money, whose shares are being sold?

If I buy a PUT without owning any shares in the underlying stock, what happens if it expires in-the-money? The seller will be required to buy the shares, but whose shares?
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3answers
4k views

Why do speculators short-sell a stock when they wish to go short, rather than purchase put options?

I'm still trying to figure out, why, if a speculator believes a security will go down in value they use the tradition route of short-selling, when it would seem that purchasing put options is the less ...
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1answer
123 views

Portfolio insurance

I am thinking about betting the house, rather than the car, and will essentially pour all my entire net worth into the market. I am trying to find a way to protect myself against a major crash. I am ...
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1answer
2k views

Do companies sell puts when buying back shares?

Say company X has a share price of $80. They think their shares are undervalued, and their board approved a buyback of $1 billion. Can company X use the $1 billion to sell puts at $79, with the idea ...
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1answer
31 views

Explicit margin requirement for RPUT ETF?

I read RPUT ETF prospectus and there is this paragraph: The number of RUT Puts sold by the Fund varies month to month but is limited by the amount held by the Fund in Treasury bills, the value of ...
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2answers
227 views

LEAPs are still long-term gains?

Do I have the following correct about LEAPs and long-term gains? If I write a put option that expires in 18 months, it is a LEAP. I get the premium once the position is opened. I close out the ...
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3answers
654 views

Wouldn't it always make sense to be an Option Writer (seller)?

I've read multiple times that options are rarely, if ever, exercised, and 90+% usually expire into nothingness. If that's the case, wouldn't you always want to be an option writer? If nobody is ever ...
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1answer
385 views

Hedging a long/short equity position with options?

If an individual was considering: LONG 100 AAPL shares at 150 SHORT 100 APPL shares at 150 How could he/she hedge the directional risk with options for those two trades? And what would be the ...
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2answers
166 views

How can an option seller get out of a contract?

I was recently on Optional Alpha, which provides an overview of how to trade options, from A to Z. During one of the videos/lectures, there was an introduction for: buy to open, sell to close, sell ...
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3answers
183 views

By pass the 100% limit in shorting: Capitalising on a Market Crash

I want to short a cryptocurrency that is highly overvalued. Let say its current value as of now is $10,000 , my intuition say that sometime next year like Feb its going to fall significantly to about $...
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2answers
391 views

Stock options: payoff diagrams assume European style exercising

Most literature on stock option strategies expresses payoff outcomes in terms of European options -- namely, ones that can only be exercised on the expiration date. See this Iron Condor payoff ...
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2answers
60 views

Selling Put Contracts

When selling a put option when is the contract fulfilled? Is it at any time between now and the expiration date, or is it only on the expiration date? For example, if I sell 1 put option for Dec 15 (...
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3answers
241 views

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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1answer
55 views

What's wrong with this margin calculation?

I'm calculating margin on put selling options using TDAmeritrade's formula. It can be found here on p.11: https://www.tdameritrade.com/retail-en_us/resources/pdf/AMTD086.pdf Using the first example ...
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3answers
2k views

How to Calculate the Expected Move of a Stock

I've been trying to determine how to calculate the expected move of a stock, and I've found there are several ways to do this but most of my findings usually lead me to this formula: Unfortunately ...