New answers tagged option-strategies
2
The best thing to do depends on what the stock actually does going forward.
If NCLH is above $16 at tomorrow's close, you will be assigned and your shares will be sold at $16.
If you buy back your short calls, you will realize a loss on them but since NCLH is higher, you have a net gain due to the appreciation of the stock. I am not a fan of realizing ...
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When you will have shares in your account after you exercise will depend on how timely your broker processes and handles exercise.
At my broker, the moment I click 'Exercise', the transaction occurs immediately and either the short shares disappear from my account or the long shares are now there. This is reflected immediately on my Accounts Summary page. ...
1
A call option is in-the-money (ITM) if the market price is above the strike price.
A put option is in-the-money if the market price is below the strike price.
In the US, if an option is one cent or more in-the-money (ITM) at expiration, the Option Clearing Corp (OCC) will automatically exercise options whether they are long or short. This is called Exercise ...
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.
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I had the same question myself. I entered a covered call on the IB platform about 2 weeks later I got a letter stating that my margin requirements were going up to 100 percent. I thought at first it would not matter as the short call is covered by the stock. Well I got up the next morning and was shocked! had little excess liquidity left and this was because ...
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A long stock collar (aka collared stock) consists of long stock, a short OTM call and a long OTM put. Typically, both options are OTM though there's no rule that says that they must be. Conceptually, it consists of a covered call and a long protective put. If one of the options expires at a later date then the position would be considered a diagonalized ...
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Your 3, 6, 9 month decay numbers are in the ballpark but not necessarily accurate. The amount of decay in each 3 month period will vary according to the IV. Look at an option pricing formula to see this.
One FRIEND that you did not consider is that with long strangles and straddles, you also benefit from price movement in the underlying. Although it's a ...
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