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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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53 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
88 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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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 ...
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1answer
32 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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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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1answer
87 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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1answer
897 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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4answers
1k views

If a put seller closes early, what happens to the buyer?

If an investor buys a put option to protect their long position, but the seller closes the position before expiration (if it gets close to being in the money), does that eliminate the buyer's "...
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2answers
101 views

Value of put if underlying stays below strike?

If ABC stock is trading at $5 and I buy the Jan 15 strike put for $8.25, what happens to the value of this put at expiration if ABC only meandered between $5 to $7 during the entire period?
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1answer
185 views

Put-Call parity - what is the difference between the two representations?

I have seen these two terms for put-call parity: S + P = C +Ke^(-rT) S + P = C + K/(1+r)^T Which one is the correct formula? When to use each of them? What is the diffrence?
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1answer
51 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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1answer
87 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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0answers
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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0answers
49 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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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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1answer
153 views

Understanding Put Options

I would like to verify that I have a correct understanding of hedging using a put option contract. For stock XYZ, the current price is $12.50. When I look at the options trading table, it appears ...
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1answer
279 views

Choosing a strike price when you sell a short combo

Often different stocks that I want to short are not on my broker's "easy-to-borrow" list, so they are unavailable for shorting. A couple weeks ago I got serious about option trading and I found out ...
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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 ...
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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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1answer
442 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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1answer
281 views

A basic put option example

If I buy 100 shares of XYZ at 18$ and a put option with one month to go at a strike of 19$ for 45 cents, then my total expense is 1845$ . Now do I have a guaranteed profit of 1900 - 1845 = 55 $ in a ...