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6

There is no "true price". There is the last price an option traded at — but as you have discovered, if a particular option is thinly traded (and many options are thinly traded) then the last price quickly gets stale and isn't useful for informing what price you might actually fill at for an order you're contemplating. You need to look instead at the ...


5

The reason that the calls appear to be down is because due to lack of trading, the last price occurred yesterday or earlier at a lower stock price. For example, the Jan '21 145c is $45.30 x $47.40 with a last trade of $39.90 . It's a stale quote. There are lots of issues with these LEAPS. They have low Open Interest, most haven't traded today, the few ...


4

A naked put (and its same series covered call synthetic equivalent) has an asymmetric risk/return profile. You limit the upside while retaining all of the downside. Two old expressions about selling covered calls (or naked puts) are: It's like picking up pennies in front of a steamroller Most of the time you eat peanuts and sometimes you sh*t like an ...


4

You bought an out of the money put, meaning that if the stock had stayed at $215, your put would be worthless at expiry. (why exercise and sell the stock for $195 when you can sell it for $215 on the open market?) So the intrinsic value of the option at this point is zero. The rest of the value of the option indicates that there is some probability that the ...


4

The SPDR® S&P 500 ETF Trust (symbol SPY) seeks to provide investment results that, before expenses, correspond generally to the price and yield performance of the S&P 500 Index. https://us.spdrs.com/en/etf/spdr-sp-500-etf-SPY Options are available on the SPY: http://www.optionistics.com/quotes/stock-option-chains The call's premium will ...


3

You can buy shares of exchange traded funds and sell covered calls on those funds. Look at SPY, VOO, & IVV as some common examples.


3

D Stanley's answer accurately explains the behavior of a put's price in relation to the price of the underlying and his graph demonstrates its non linear behavior. However, there's more to this story. The short answer is that the brick wall that you ran into was an implied volatility contraction. Option price is based on 6 variables: Stock price, strike ...


2

Determining the Price Ideally a model would be the best way - some trading platforms offer them though they may not be as sophisticated as say, the ones the market makers use. However, in order for a trade to occur, two parties need to agree at the same price, and even if your bid may be at the theoretical price, a market maker might need a minimum amount ...


2

If you start selling naked puts better sell them well out of the money because tail risks are really significant and you can't underestimate them. You will generate very small income in front of huge risk of losing the entire margin account. There is other more reasonable strategy. It is also risky, but at least if you fail with it you will end getting ...


1

Your question isn't clear. If you have sold a naked put, you would buy it to close to end the contract not Sell the option at that price, if ITM. There are 3 possibilities at expiration. 1) The put is out-of-the-money and it expires worthless 2) It is in-the-money and you buy it to close from either another trader or the market maker 3) It is ITM and you ...


1

Why isn't the stock price and options price linear? The option has an expiration date. Every day that goes by, the date is closer and the risk is different. How is the price premium for any stock option ($2.55 in my case) determined. The market. There are various pricing models to explain or estimate an acceptable price but you can never assume all ...


1

You owe the money. Contrary to what most people think should happen, early exercise does happen for a variety of good reasons. I have done early exercise once I decided I would hold a position because I could change the tax status I was under by the exercise. The broker actually had to cover your charge out of their pocket. They paid interest to a bank ...


1

If you bought the underlying on margin and you held the position overnight then you owe the broker margin interest. This amount would be the borrow rate times the amount borrowed times the number of days held, divided by 365.


1

Yes, it could be said that the probability of profit for a short Iron Condor would be the leg with the highest delta. The probability of touch is about twice the probability of expiring ITM. Traders tend to adjust their short positions before or when the short leg goes ITM so perhaps consider this number as well.


1

To sell a covered call you do not need to buy a contract instead you need to buy 100 shares of a security that tracks the S&P500. You should consider buying one of the common S&P 500 tracking ETFs such as SPY, VOO or IVV. To facilitate this you will have to open an option trading brokerage account or add options trading to your existing brokerage ...


1

The video involves traders who are short the OEX stocks and are long OEX calls and it's late afternoon on expiration day (DNW most of video). McMillan's premise is that if the number of ITM calls exceeds 40,000 then they will be placing Market-on-Close orders to buy the stocks at 4 PM, pushing the OEX settlement price up, more so than other indexes. ...


1

Quoting Obligations Options firstly have to be listed on an exchange. Once listed, the exchange asks their Market Makers to post two-sided quotes in that option series (for example, by requiring in their rules that the market makers members have to quote in each of the listed series 60% or 75% of the time the series is open for trading). Those that do not ...


1

Stay in cash so all greeks are Zero.


1

The easiest way to do it is to first neutralize your gamma with another option, then neutralize your delta with the underlying. For example, consider the following options chain: https://imgur.com/aXBi8A9 (sorry, StackExchange for some reason isn't allowing me to add the image here directly – feel free to edit and fix it). That's SPY for June 21st, 2019. ...


1

Gamma indicates how much the delta of the option will change as the price of the underlying moves. You could reduce the gamma of your position by buying or selling another option with similar gamma. That option would also likely have delta as well, so would need additional delta hedging. Alternatively, you could just continue to delta hedge as the delta ...


1

I think that Investopedia is the most comprehensive source of investment information with which you can build a broad base of basic financial literacy. Beyond that, you're going to have to delve into more detailed books.


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