Personal Finance and Money Stack Exchange
Personal Finance and Money Stack Exchange

Questions tagged [options]

This tag is to be used for any question on Options, A more specific tag [put-options, call-options, options-assignment, option-exercise] should be used when appropriate.

An option is a contract to buy or sell a specific financial product. This product is known as the option's underlying instrument or underlying interest. For equity options, the underlying instrument is a stock, exchange traded fund (ETF) or similar product. Put options are contracts to sell and Call options are contracts to buy.

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Buying an option in the money, at the money, or out of the money

How would one make trade-offs between buying a call option a few dollars ITM (in the money), ATM (at the money), or OTM. I mean I understand the plain dollar differences / calculations on the surface, but I don't understand how folks choose these…
Ray K
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How do I buy an option that doesn't exist yet?

For example, the latest option date on a particular stock is Jan 2014, but I want to buy an April 2014 option. According to Google Finance, none exists. Is there any way I can place any order for such an option at a particular strike? Am a retail…
WOFL
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Is buying Options trading less than 100 stocks possible?

As I understand I can just purchase options that trade 100 stocks. Are there possibilities to buy, lets say, a put option to sell just 5 stocks at a given strike price?
rantanplanthesecond
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Why do options retain significant extrinsic value after market closing on day of expiration?

Introduction to options sources invariably say an option's extrinsic value becomes zero at expiration. However, in reality this is not the case. For example, it is almost 7pm on 8/21 and "8/21 292 SPY" calls look like this according to my broker,…
KevinRethwisch
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Why do options skip May/June?

I notice a lot of stocks aren't offering options for May. Many aren't offering for May and June. Is there any reason for this gap?
4thSpace
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Why Gamma is highest for an option that is at the money

What is the reason that At the Money options have the highest Gamma? I understand that Gamma is the rate of change of an options price w.r.t the change of the underlying price (a.ka. the change of delta). So for deep in the money option (which has…
Victor123
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When you buy an option contract, how often is the market maker providing the contract (vs. another investor)?

My limited/perhaps incorrect understanding is market makers keep liquidity in options by increasing spreads in options that are less in demand, because they have to provide/make a market for them. On options on a "stock" like GLD, how often when…
Ray K
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How to get approved for option trading?

I recently tried applying to get approved for trading options in my brokerage account. I have 10k in the account ~$4k in cash and I'm 23. I have more than the average investor's knowledge when it comes to investing and options in particular. My…
Fueled By Coffee
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Why are there no fractional options?

Some options can be expensive because they have 100 shares as underlying. Given that fractional shares exist, why are there no fractional options to help reduce the cost? Is it because of illiquidity and low demand? If not mistaken, a few years ago,…
Flux
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Why does buying OTM options offer the most leverage?

OTM (out-of-the-money) options are cheap but even decent move can yield dramatic returns that eclipses ATM (at-the-money) or ITM (in-the-money) options, but what I don't understand is that delta and gamma is supposed to be low for OTM so what causes…
javada
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Realistic option graphs?

Typical option graphs are only valid at the time of expiration: This only expresses what happens at the moment of expiration (and ignores trading costs). But what about extrinsic value (theta and implied volatility)? Before expiration option value…
KevinRethwisch
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Fill price above my ask - how is that possible?

I had tried to sell my GDXJ options @ 12.80, I saw there was a fill at 12.95 but none of my options were sold. When I called the broker they said option spreads are given priority. I can understand if the option was buying/selling @ 12.80 and option…
user44069
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What happens to a call option in a cash/stock acquisition?

Let's be specific. I hold April 2016 135 calls for CB (Chubb). CB is being acquired by ACE. The deal is $62.93 per share in cash and 0.6019 share of ACE stock for each share of CB. The deal is expected to close 1Q'2016, before my expiration…
Don Venetti
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How does a delta neutral portfolio make money

This is a really basic question,so I apologise. If I have a delta neutral portfolio consisting of an option and its underlying, such that any move in the option is cancelled by an opposite move in the underlying and vice versa, then how can this…
Victor123
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Why are there no options with $0 strike price?

When I look at options chains, there are no options for strike price $0. Not even for low-priced stocks. Not even for stocks of bankrupt companies that still have unexpired options. Why is $0 omitted?
user102086
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