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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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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
39 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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3answers
127 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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0answers
31 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
100 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
27 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
50 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 ...
2
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2answers
56 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
37 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
61 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
41 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
91 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 (...
3
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1answer
491 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
196 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
55 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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1answer
131 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
196 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
223 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
66 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
35 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
553 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 ...
0
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1answer
31 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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0answers
38 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
99 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 ...
2
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1answer
118 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 ...
11
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1answer
1k 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
129 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
354 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
254 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
155 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
178 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 $...
3
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2answers
308 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
52 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
184 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
1k 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 ...
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4answers
94 views

Selling To Close

Is it possible to sell to close a call/put option I own for a profit even if the underlying stock price has not exceeded the strike price? If my cost basis is .10 per contract and that same option is ...
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1answer
109 views

Is it possible to see option prices from the past?

For example, I can look up what a companies stock price was like in the past, but I can't look up an option chain from the past.
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2answers
121 views

Option trading: High dollar value stock option and equity exposure

Probably an elementary question on options: If I trade options of a high dollar value stock, I will be exposed to higher equity as 1 option = 100 shares. Is there a way to reduce equity exposure? ...
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1answer
73 views

How to interpret these explanatory graphs (about option strategies)?

I was reading about different option strategies at TradeKing and although I think I understand how these strategies work, I don't see how they are explained by the accompanied graphs. So just to take ...
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1answer
86 views

Stocks, Options, and Income Tax

It is my understanding that if an investor owns a stock and sells a qualified covered call then dividends from the stock are still qualified. However, if an investor owns a stock and buys a put option ...
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2answers
3k views

What is the face value of sovereign and Britannia gold coins?

I have seen claims on the internet saying sovereigns have face value of £1 and £100. These coins therefore have an embedded put option at the strike being the face value.
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1answer
93 views

Put Option Pricing

I'm looking to buy a put option, but I don't understand the pricing. There is a stock X, and it trades at $200 / share. A 1 week put option is priced at $0.75 / option. But to actually make the trade ...
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1answer
738 views

Can I buy put options on an ADR?

A stock is listed on Tokyo Stock Exchange. I want to buy put options on it - how can I do that? Or is short selling an ADR my only possibility?
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2answers
71 views

Put on a put option

I am not entirely sure why you would want to do this, but if you believed that a stock would increase in value, but you doubted yourself severely, would it be possible to buy a put option where the ...
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3answers
671 views

Always profitable combination of options strategies?

Why can't we just combine multiple options strategies to get an always profitable scenario? For example by combining protective call and protective put won't we be able to get an always profitable ...
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3answers
191 views

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 ...