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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59 views

Significant (75%) End of Day jump in option price

I am fairly new to option trading so am having a hard time making sense of this... I had a $10 put option for VIVO with 02/21/20 expiration. As viewed in the Robinhood app, the option jumped from $1....
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31 views

Impact of Open Interest or Volume to the Price

The following is the Option Chain for the symbol UBER. There is a high Interest for 40 CALL. There is less interest for 40 PUT. My questions are: What is the difference between VOLUME and OPEN ...
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154 views

Selling deep-in-the-money puts

I bought 1000 shares of xyz stock for $2.70 ($2,700) and it started dropping value soon after to $2.50. I can sell deep-in-the-money puts ($7.00 strike) currently for $4.20 per option. Meaning I would ...
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4answers
470 views

Do most rookies make a fortune in a bear market by short selling and put options?

A friend warned me not to be over confident in my rookie years buying stocks. He said during a bull market, it is very easy for everyone to look like a winner. Can the reverse be said for rookies ...
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1answer
104 views

Selling PUT and CALL

The Option Chain of a stock is given below. The stock price now is $22.50. If I sell a $21 put, I'll receive a premium of 15 cents and I will be obligated to buy the stock at $21 if it is below $21 ...
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1answer
82 views

How to make profit when the stock price is in Out of Money?

I'm so confused by the article in Marketwatch where the author says a profit is made when the stock price is out of money. Per that article, I assume the trader bought options for a strike price of ...
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41 views

What value should be used for a TrailingStop $ for a PUT Option in eTrade trading platform?

I have a PUT contract for a XYZ stock with a strike price of $160. I'm speculating that the stock price of XYZ can go down in the next few weeks. I would like to set up a TrailingStop order for a $ ...
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1answer
85 views

Buying a PUT OPTION in the Out Of The Money

The scenario is this. The price of a XYZ stock is $150. I speculate that the stock price can go to $200 and then retreat to $160 in six months. Is it possible to buy a PUT OPTION at strike price $199 ...
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2answers
83 views

Protection against put-options writers bankruptcy

It's possible to hedge portfolio against the crisis by buying put-options. One thing that worrying me - what if insurers will be bankrupt when you need them the most. This crisis insurance (put-...
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1answer
99 views

What is the graph of hedging using put options?

An investor owns 1,000 Microsoft shares. The price is $28 per share. He is concerned about a possible share price decline in the next 2 months and wants protection. Buying ten July $27.50 put option ...
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4answers
115 views

Option implied volatility and 95% losing trades?

I trade options. Whenever I buy puts or calls, I end up breaking even or losing, sometimes losing a HUGE amount of money even though price has gone my direction and time decay (theta) has been ...
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322 views

Can you buy an option and immediately exercise it? Options delays questions

Assuming American Options Can you buy a stock option and immediately exercise it - or are you only formally given control of the option at the end of the trading day? Would you be able to sell it ...
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1answer
93 views

What happens if you sell a put and the company splits or spins off a business?

I'm considering selling FB Jan 2022 puts at the $145 strike and I'd like to know what would happen in the following scenarios. Scenario #1 Facebook spins off or sells Instagram and/or WhatsApp prior ...
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0answers
25 views

Put Option Settlement for All-Cash Acquisition with a CVR?

How are in-the-money put options settled when an acquisition price includes a contingent value right (CVR) that causes the stock to trade above the acquisition price? Example: Alder Bio acquired for ...
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2answers
78 views

Exercising Options question. Please check my math

I'm spending some time learning options and I have a scenario question. I'm attempting to have this make sense in my head but this just doesn't seem right or maybe I'm missing something. I see this ...
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1answer
69 views

What is the effect of a short stock position on the value of an option?

I'm reading the book "Option Volatility and Pricing" by Natenberg and there is a paragraph I'm having trouble understanding. Chapter 7 (Risk Measurement 1), Page 98, Paragraph 2: The value of a ...
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51 views

Put Option Value when a company liquidates

If you buy PUT options and then the company liquidates itself (please note I am not asking about bankruptcy)? What are your prospects? Do you get your value for your in-the-money puts, and if so, how?...
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1answer
45 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
767 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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4answers
265 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
46 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
90 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
492 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
48 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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117 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
49 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
175 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
182 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
261 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
146 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
58 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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1answer
74 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
113 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
34 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
162 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
208 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
59 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
111 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
45 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
126 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
2k 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
811 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
106 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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328 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
561 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
852 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
70 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
113 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
2k 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 ...