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25

A stock can only lose ~100% of its value on the downside, so while the risk is high it is effectively capped and definable selling naked puts as you can't go lower than zero on equities. Selling naked calls opens you to potential infinite risk as stocks can easily rise 100s (if not 1000s in some case) of percent higher from where they currently are. Compare ...


13

When there is a stock split (forward or reverse), the options are adjusted to reflect the terms of the split. In this case, the new option root symbol for adjusted options is USO1. Below is the OCC memo that explains the adjusted option. I can't provide the link because since I am registered with the OCC, my name is in the web address link. If you want ...


12

Bob gave the technical details, but for the practical result for you, you now have options on a "synthetic" underlier that has a strike price 8X lower than the new USO quote (equivalent to the "old" price). So if you had, say, a $2 put on 100 shares of USO before, your option is now equivalent to a $16 put on 12 "new" USO shares (plus $8 cash to compensate ...


7

Traditional exchange traded options are for 100 shares. There are post reverse split contracts that cover less than 100 shares but because of the adjustments, the terms of the contract have changed. These are often complex and should be avoided if possible. The CBOE introduced 1/2 a dozen or so mini options about 6-7 years ago but the public never took to ...


7

In a few cases (but not many) yes. The SPX mini for example.


4

Pattern analysis such as double tops is wishful thinking, especially 'vague ones'. Support and resistance is arbitrary. Anything that is oversold can become far more oversold and vice versa. As for the RSI, it is an improvement on the Rate of Change and Stochastics indicators because it removes the 'take away' effect of early data. Because it is a ratio, ...


4

You can buy any option contract you want if you can find someone willing to take the other side of it; this is entirely common in real estate, for example. In the case of publicly traded stocks, however, option contracts are standardized specifically so that they can be reduced to a simple code (I happen to be involved in some SFL 200515P00010000) and ...


3

The Options Clearing Corporation and the rest of the industry went through an initiative a few years ago to standardize options symbols (the Options Symbology Initiative or OSI) so that they could support mini options. These would be typically for 10 shares rather than 100, and many exchanges offered reduce fees for mini options over regular options... ...


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

CBOE is one of the few exchanges that still has a trading floor (the options exchanges began to go electronic in 2000) and CBOE themselves went electronic in 2006 with their "Hybrid" trading system, combining electronic and floor trading. The posts are remnants of the physical trading floor, where a market maker would stand at his 'post' or booth and floor ...


3

When you buy the stock just before the close on Monday afternoon, you own it and all of the subsequent profit or loss accrue to you. The same holds true for the short ITM call. Settlement is effectively just back office procedure. If you are assigned on Tuesday, the call is settled on Wednesday (T+1) and the sale of the underlying is settled on Thursday (...


2

This paper tries to explain the exact problem you're facing. They're essentially saying that LEAP puts are overpriced relative to calls 80% of the time (makes sense if you consider widespread hedging of institutional equity portfolios using index put options). To expand on what they're saying, you should consider the prices you're putting into your ...


2

I'll address the equity/index options aspect of this. If an option is one cent or more ITM at expiration, the Option Clearing Corp (OCC) will automatically exercise your options whether they are long or short. This is called Exercise by Exception. For American style equity/ETF options, you will end up with a position in the underlying (long or short). ...


2

When you establish a new option position it is either: Buy to Open (BTO) or Sell To Open (STO) When you close an existing option position it is either: Buy To Close (BTC) or Sell To Close (STC) A closing position cancels an opening position. IOW: BTO + STC = no position STO + BTC = no position


2

There are 4 levels of option trading approval: Level 1 – Covered Calls & Cash-Secured Puts Level 2 – Long Options Level 3 – Option Spreads Level 4 – Naked Calls & Puts Because a naked call has the potential for greater loss than a naked put, some brokers split Level 4 above into two levels: Level 4 – Naked short puts Level 5 – Naked short ...


2

Since there are no exchange traded options for Berkshire A then the only alternative is a private transaction on the the over-the-counter market. These transactions are not guaranteed by the OCC and the option exchanges. There's no secondary market so there's almost way to adjust or close the trade other than with the original counterparty. Such ...


2

Right now, the quote for your call is $0.08 x $0.09. What was the bid/ask spread on the day that you bought the option? If it was wide, say $0.11 x $0.17 then you are overvaluing the price change by the spread width. The bid to bid drop was only 3 cents (part of your loss was due to a wide spread). A midpoint valuation would be a drop of 5-1/2 cents. ...


2

A BTO Call option Expires Next Day is $1.00 (Strike Price XXX). Next day irrespective of stock price move, option Premium came down to $0.30 as it expires same day. So Can I buy the position, "Sell to Open" Call at $1.00, Next day to "Buy to Close" at $0.30 for the profit of $0.70 ?? You wouldn't say you're buying that position, because you are ...


2

OPRA Data Last Sale information for all US options exchanges is generally distributed in "real-time" through the OPRA market data feed, and many brokers offer historical versions of that data through their market data services. For this specific example however, my broker does not offer time and sales for expired options. The OPRA time and sales data ...


2

You actually sold that put, that's why it shows you received a $12 credit and indicates that you'd have to buy the option back to close out the position. Holding until expiration gets you that extra dollar in premium if the option expires worthless. Buying it back for a dollar closes out your position, releases collateral, and eliminates tail risk (if USO ...


1

(A) buys a call to open from counter party (B) who sells the call to open. There are four possible outcomes: The contract is OTM at expiration and expires worthless (A) exercises the ITM call to buy the stock from (B) (A) sells his call to (C) and the counter parties are now (B) who is short the call and (C) who is long No one does anything and the call ...


1

No but you can buy a spread (buy a put and sell a cheaper put) if you are looking for a cheaper trade than just buying the put. However, your profit is more limited and it takes time to realize the maximum profit


1

Volume has nothing to do with option pricing but it does affect price. What does that mean? An option's theoretical price is determined by the price of the underlying, the strike price, the time remaining until expiration, volatility, the carry cost (interest rate), and cash dividends (if any). The intrinsic value has nothing to do with it because that is ...


1

You can see the volume and price of option trades in Time & Sales in/at a decent broker's platform/web site. You're going to need some clever way to data scrape if you want to collect the data because it could be 100's of pages daily for an underlying with liquid options, even 1000's for something like the SPY. You're not going to find a free web site ...


1

When you establish a new option position it is either: Buy to Open (BTO) or Sell To Open (STO) When you close an existing option position it is either: Buy To Close (BTC) or Sell To Close (STC) A closing position cancels an opening position. IOW: BTO + STC = no position STO + BTC = no position It is very important that you to understand that uncovered ...


1

Many Market Makers (who most likely sold you the options) make zero assumptions about which way the stock will go. The moment they sell you the options, they immediately hedge their position by buying or selling stock to cover the delta of the position. The people advising you to use technical indicators are often people who stand to gain regardless of ...


1

There do not appear to be any exchange-traded options on OXLC: https://www.nasdaq.com/market-activity/stocks/oxlc/option-chain So any options would need to be over-the-counter, which retail brokers are probably not equipped or willing to set up or help you find a counterparty.


1

In an illiquid market, the market maker sets the prices. His computerized programs will automatically adjust the options price when the underlying changes enough to warrant a change in the price of the option (delta of option times the underlying's price change). In a liquid market where market participants are the market, there are various types of ...


1

Assuming that both options are the same type (i.e. put or call) then yes, they cancel each other out. If you initially sold the option, then bought the same option (same underlying, strike, type, and expiry), this is called buy to close. You close out your position, and the "clearing house" cancels out the two contracts. Is it the same with the reverse ...


1

From what I have read, the Robinhood app has a lot of glitches because it's a relatively new broker. If you're going to trade, you need a brokerage platform designed for trading that offers: Continuous access to the platform Easy and fast order placement Smart Routing directly to the ECN with the best price A well known Robinhood issue is that they ...


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