34

If you look at DISH's dividend history, you can see that on 20111101 DISH declared a special $2/share dividend payable on 20111201. The ex-date for that 8% dividend was... 20111115. The $2/share drop you saw from the 14th to the 15th was the stock going ex-dividend. So the stock options (which are American options) were deep in-the-money with a large ...


23

A person with an opinion such as yours might sell these options because they think that there's a high probability that such options will expire. Why would someone buy them? The options could be undervalued and a buyer could be attempting to take advantage of that (standalone or combined with other options in a more complex strategy). Cheap long OTM ...


20

This is maybe kind of stupid, but it's a mnemonic device that worked OK for me to get the hang of these two varieties of option. It may only work for American English in my particular region, so if it doesn't immediately help it might be better to abandon: You might call someone up, and you might put someone down. These are idiomatic in the English I've ...


15

They might be buying it as a kind of insurance for index trackers they own; they're guaranteed that they don't lose more than 28% of their investment (until June 11th) for only a small price; even if the market falls by, say, 40%, the options will (partially) compensate for the loss.


11

When you exercise a long call to buy the underlying, your cost basis of the stock is the premium paid for the call plus the strike price. Your gain will be long term or short term depending on your holding period for the underlying stock. However, you are taxed if you sell the call prior to expiration or it expires worthless. See page 58 of IRS Publication ...


11

The owner of a call has the right to buy the underlying at the strike price any time before expiration. The seller of that call has the obligation to sell the underlying at the strike price if an owner exercises the call (the seller is assigned). The owner of a put has the right to sell the underlying at the strike price any time before expiration. The ...


9

Not really answering your question, but I think it's better just to remember the existing words that are used. PUT option I have a stock, I have the option to put it back on the market. Like I would put the milk in the fridge. CALL option I don't have a stock, but I have the option to call one to me. Like I would call a dog to me.


5

Your scenario is impossible because an option that is $10 in-the-money will be worth at least $10, so one possibility is stale option prices, but let's take the directional moves and see what could have caused it. The most common model used to price options is the Black-Scholes model or variants. With the B-S model, there are 5 input variables: Strike ...


5

8 days ago, With TSLA at $645 and the 6/21 $1050 call at $47.50, your call's IV was 77.05%. Today, with TSLA at $645 and the 6/21 $1050 call at $33.25, the IV is 68.95%. IV fluctuates daily based on news as well as general market conditions. In this case, IV contracted over the past 8 days and therefore so did option premium. You can see a graph of the ...


4

What you are describing is called the "Stock Replacement Strategy" where you buy a high delta deep in-the-money call LEAP expiring as far out as possible instead of 100 shares. Because the call is deep ITM, if the implied volatility is reasonable, you'll pay minimal time premium. LEAPs have very little time decay (theta) for many months which ...


4

If you understand the principle of options - that you can profit from a price rise (a long position) or from a price drop (a short position), then there is a trivial mnemonic to remember which is which: Call has 4 letters, and put has only 3 (shorter word!) - therefore a call is long, and a put is short!


3

Succeeding with options requires a comprehensive understanding of how they function, their interrelationship with the underlying and good timing and selection. Without that, they will take your money. So without a lot of cash to burn and being fairly new to trading options, the last thing that you should be doing is trading options. My first option ...


3

By selling-to-close the original buy-to-open position with the exact same contract, you are creating offsetting positions. Imagine there is only one options contract in the universe. You bought it from person A whom sold it to you (let's assume they sold to open) and you sell it to person C. You no longer have any obligations wrt to this contract but person ...


3

Whenever you see a number after the root symbol, it means that you are looking at an adjusted option due to a corporate event. Adjusted options are a PITA. I see OXY2 options listed in IBKR as well as at a web site that provides option quotes so I'm not sure what to say about your question about the contracts having stopped trading. Here is some information ...


3

Per my comment under your question, the execution time of the trade would allow a look at Time & Sales to see what the NBBO quotes were for your options when you made the trade. It would also show if you traded at the market (used market orders) which is my suspicion. Without that info, my suspicion is just a guess. Why that guess? The midpoint of the ...


3

With both stocks getting whacked, clearly, the market doesn't like this merger. Your 8/14 $150 calls dropped $7.45 today. If LVGO is below $150 on 8/14, these calls will expire worthless. When the merger occurs, the option contracts will be adjusted. You will receive 59.2 shares of TDOC per 100 shares of LVGO plus $11.33 in cash. If you multiply .592 ...


3

The theta of this call option would be about -0.09 so the expectation would be about 18 cents of time decay in two days. After that, your question has gone off the rails. If you buy a $150 call for $5 when the stock is $150 and the stock rises $10 to $160 in two days then the intrinsic value of the call is $10 and the price of the call would be over $10. ...


3

The most active ETF options traded in the US is the SPY and in no particular order followed by IWM, EEM and QQQ. The next tier of active ETFs tends to be the SPDR ETFs depending on what's active in the market that day or week (tech, finance, precious metals, oil, etc.). The SPY is so active that the spreads are fairly narrow going out a good number of ...


3

Yes, the owner can exercise his call early but that is very unlikely unless the call has very little time premium remaining and that occurs either very close to expiration or the call is very deep in-the-money. It is very unlikely that a call owner will exercise an out-of-the-money call because that would mean that he would be paying more for your shares (...


3

The premium of the option will become part of the cost basis for the stock, meaning the cost basis of your stock is the strike price of the option plus the premium paid. There is no tax consequence until you sell the stock that you received. The price you sell the stock for minus the cost basis will determine if you had a gain or a loss. The category of the ...


3

You can sell an expiring equity option until 4 PM EST on the day of expiration. What your option will be worth tomorrow morning will depend on the price of GME, how early in the morning GME rises (if it rises) and what the implied volatility will be at that time (IV is all over the map for GME). Based on today's closing quotes, you should be able to break ...


3

Yes and no. You generally trade with another trader that wants to buy / sell at that moment what you want to sell / buy, for that price - exactly like with shares. However, there are ‘market makers’ whose role it is to make sure the market is liquid, and they will trade with you if nobody else wants to - but for a price they think is fair for them (this is ...


3

Call is an Option-to-buy (at a given price by a given time) Put is an Option-to-sell (at a given price by a given time) And, you can buy or sell either one. When I buy a call, there is a trader at the other side of that trade, selling that call to me. Loads of Q&A here regarding options. The mechanics of trading is simple, the valuation is where the ...


2

The option owner can exercise the ITM call. Even if he doesn't, the OCC exercises all options that are one cent ITM at expiration unless the owner of the call desgnates through his broker that his long options not be exercised. This would make sense if the closing cost exceeded the ITM amount. This process is called Exercise By Exception. The owner of ...


2

For a call option, it means the price of the underlying (stock) is at least $0.01 above the strike. The payoff is independent of the premium but at expiration the premium would be zero anyway, as there is no time value left.


2

When options are adjusted due to a split, a "1" is added to the option root symbol. It is a new security. If you are using a tax accounting program, you will have to force the pairing (or adjust the original symbol). CHK1 is a valid symbol and its options can be looked up. How you look it up depends on the web site or broker that you are using. ...


2

After adjustment, should I treat CHK1 as a different symbol than CHK? Yes - you effectively have an option on a synthetic stock that is worth (per share) 1/200 of the "current" CHK share. Currently, CHK is trading at $15. Will my calls be ITM on expiry if price stays like this? No - your options are equivalent to a call on the "new" ...


2

If you buy something and then you sell it, you no longer own anything. So if B buys it and sells it, he's out of the equation. A and C are the counter parties. Buying a call does not have the same effect as selling a put.


2

Two long calls at $20 per contract costs you $4k. That leaves you with $1k in your account. If your calls are in-the-money at expiration and you do not close them, the OCC will auto exercise them and you will have to buy $40k worth of stock. If it's a cash account, you're lacking $39k. If it's a margin account (50%), you're lacking $19k. Brokers ...


2

Someone who thought that they were worth more (ie, that they were cheap). They only need to rise in value at some point in the future for the new holder to make money, as long as they can sell them to some one else for a higher price before expiry.


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