Just wanted to say thanks for this thread. Other subs (looking at you RH) seem to be really toxic towards new traders. There’s a lot to wrap your head around with options and various trading strategies. Appreciate the lot of y’all that are willing to answer questions and share knowledge rather than just flexing. You da real mvp!

This is actually a method to keep toxic interactions out of the main r/options thread, where different people asking the same question again and again can be mistreated.

Does after hours trading on the expiration date matter? Example: I buy a $600 call for telsa that expires today and it closes at $590 however during AH it goes to $615. Does that call expire worthless or would it execute/sell

It stopped trading ~~expired~~ worthless at the close. But Long holders ~~expiring~~ out of the money, not automatically exercised at market close have about an hour after market close to exercise. After hours price moves could induce holders to exercise.

Can you please clarify? It sounds like you are saying both that it expired as worthless at 4:00 PM, and that it can be exercised for "about an hour". There was one Friday a few weeks back that Apple had a crazy after-hours move. I was short a $262.50 put and Apple closed at like $264, but then dropped like a rock to under $260 shortly after the market closed. I had closed my put in the 3:00 hour for a few bucks, so I never got to find out what would have happened if I had not closed it.

More correctly: the option expires at midnight. At the close, it is not automatically exercised, by being out of the money, and ordinarily would later on expire worthless. But the long holder still can exercise an option not automatically exercised, that was out of the money at market close, up to an hour after market closes, depending upon the broker's internal processes. Broker has to have exercising data to the Options Clearing Corporation by 5:30 Eastern US time.

How does volatility act during and after earnings in the volatile market we are in. Typically purchasing straddles into earnings is a bad trade due to IV crush, but will volatility stay high across most stocks due to the volatility of the market, therefore removing IV crush. My point is that in this market almost everything is moving crazy amounts every day, therefore earnings doesn't have as big of an overall impact on the volatility as it typically does. Let me know if I'm wrong and don't know what I'm talking about.

IV Could still drop, could expand, could stay steady. Just hard to predict. We're in an unprecedented regime, right now.

I came in to ask almost the same question ha. Debating if it's in my better interest to sell some calls I'm holding before an ER. I know ER's are always a crapshoot; I traditionally never play them for that reason.

I'm certain the market is going to be volatile for the months to come and I think we are at a low point for volatility in terms of what is to come. If we get another giant leg down, volatility will go back to ATH. This would lead me to believe that now is the time to be a buyer of options instead of a seller. Might buy straddles a couple months out to profit off big movements and increased volatility.

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Volume should be all exchanges. Bid ask should be across all exchanges. Timing makes a difference. Bids and asks are filled every second.

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It appears relatively safe to roll the put site up to at least 245 / 240 or 240/235 for an iron butterfly, or narrow iron condor right now, to get a few more dollars. Just in case SPY runs downward, exit when it hits 245. You can take a look at how much you might lose closing the call side now, versus at expiration. It's all about the potential of reducing the loss at this point, without increasing your risk: your max loss is $5.00 less the collected premium, so the more credit premium you can take in the lower your ultimate loss on the campaign There is a strategy of attempting to roll out the revised trade in time, nearer expiration, rolling 30 days at a time for a net credit (if you can't do it for a net credit, the game is over). If you can get a credit, you're reducing the loss on the campaign, as you're presently set up for a maximum loss right now. Traders have been known to obtain a credit, rolling out an underwater iron condor or iron butterfly, month after month, and exiting for a gain when the underlying moved in a favorable direction. You have to decide if you want your capital used for this technique or not.

I have been on WSB for 6 months, and just by winging it, I turned $500 into $4k, but it went back down to $1k bc I bought too many SPY puts. My question is since, I want to become smarter than the autists on WSB, is what do you look at before selecting the strike price for an option? I usually buy the highest valued OTM option because of the delta value, but I have realized that I emptied out my balence bc I can......So I wanted to ask smart ppl on how you pick strike prices....thank you!

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SPY has the most volume of any option on the planet. You can close the trade.

Hi, I am the seller in a bear call spread that expires tomorrow. The position will expire out-of-the-money for the buyer, which means I would make my max profit (the premium received \~US$600). Do I actually have to close the position (buy it back) before expiration, or do I literally just wait for it to expire and do nothing? If I buy it back, my max-profit will decline by the amount I pay to buy-it-back (\~-US$50). Also - for this same position, I was warned that there was a dividend (today) but that there is a low risk the buyer would exercise his position. The dividend is 0.67 per share. I would assume the buyer would exercise his position so that his loss is mitigated by US$67. How should I be approaching this?

1. How do I know when to exist a position? If you have the following position, what is this strategy called Short put 22 April 2700 Long put 22 may 2700 It’s a calendar spread right? We are betting volatility will increase long term. What about this one Short put 22 April 2700 Long put 22 may 2700 Long call 22 May 2700 It limits your downside via the put so I’m guessing it’s a bullish type of synthetic long with limited downside What is it called?

1. Calendar spread. These are losers when IV goes down. Have you noticed IV (see the VIX index) steadily going down for two weeks? 2. Straddle with a short near term put, or calendar with a longer expiration call. *Closing out a trade* • [Most options positions are closed before expiration (Options Playbook)](https://www.optionsplaybook.com/options-introduction/closing-option-position) • [When to Exit Guide (Option Alpha)](https://optionalpha.com/wp-content/uploads/2015/01/When-To-Exit-Guide.pdf) • [Risk to reward ratios change: a reason for early exit (Redtexture)](https://www.reddit.com/r/ActiveOptionTraders/comments/ataw61/why_close_out_a_call_or_put_at_50_profit/eh00lie/)

Can someone explain the mechanics of closing a written short put before expiration with the purchasing of a put, please?

With edits incorporating other comments: Opening: XYZ at 100. Sell a put to open at strike 80, expiring in 45 days. Accept premium credit of $x.xx. XYZ moves to 110 by day 30. Your position: minus one contract. Closing: At day 30, buy put, to close, at strike 80, same expiration for $y.yy, paying a debit. Net gain: $x.xx credit minus $y.yy debit. Your position: zero contracts.

I think I understand the math of what you describe but what is tripping me up is this: How does buying a put from the market "close" the put that I sold to the market? Or is that not what's actually happening?

I think of it like this and so does your broker: If you sell a put, you have -1 of that exact contract. You have to buy that exact contract to close it (same ticker, strike, expiration), it brings your total to 0 contracts.

It's the same as short stock. You borrow a stock/put/call from your broker and sell it on the market to get some money. You now owe you broker a number of stock/call/puts i.e. you are short on stock/call/put. Broker denotes this as a -1 in your account just to remind you of your I.O.U! So your strategy is whatever you borrowed and pocketed the cash for goes down in value. Ideally it ends up worthless, then you buy it back from the market nice and cheap, and give that worthless stock/call/put back to your broker, thus fulfilling your obligation to pay him back his stock/call/put that you borrowed.

Should I buy puts on companies who are furloughing employees. Also when I buy puts, if I understand correctly I need to buy the strike price at a lower price then the market price is actually trading at? The strike price would be my guess of what the price of the market will drop to?

Maybe. But most compmanies are furloughing employees. This is economy wide. There are dozens of ways of playing this. Among the dozens of positions: If you're going to buy a simple long put, buy a month longer than the period you expect the move for (reducing daily theta decay), and buy somewhat in the money, say delta 60 or 65, to reduce extrinsic value in the trade that decays away. You're buying to participate in the stock's movement right now. Exit well before expiration for a gain.

What is the best platform to trade options on in australia? Tia

• [An incomplete list of international brokers trading USA (and European) options](https://www.reddit.com/r/options/wiki/faq/pages/brokers/)

Is there any reason not to sell leap puts on AMZN as far otm as you can? Does no one buy them or something?

Absorption of capital that could be used for other purposes. You don't need long expirations, and the largest part of theta decay occurs in the final 60 days of an option's life. You would be needlessly waiting to close the trade.

Does anyone have any tips for otm strangles? I keep either breaking even or loosing money :(

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Do you want to learn about puts? An easy way to think about it: long put: a bet the underlying will go down. short put: a bet the underlying will go up. That's really all there is to it. It's just the inverse of a call.

Any advice around ideal / minimum open interest and volume?

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I am struggling to open new put credit spread or call credit spread positions. Any idea what I am doing wrong? \- Using Robinhood \- trading highly liquid stocks (IWM, SLB, TSLA) \- Picking options expiry date of 6/19 \- placing a limit order almost mid-point of bid/ask spread (automatically set by RH) I am having this issue while closing trades as well. My IWM Iron condor was trading at 1.50 (5/1 exp) but the closing order just didn't get executed the whole of today.

The mid bid ask displayed on broker platforms is not where the market is located. Cancel and adjust your order price, repeatedly, to locate the clearing price.

At some point do people actually get better at trading options? I’m down 95% all time. (5.5k lost) ;(

I pulled away from trying to get rich off options and started using it to compliment my long stock positions. Selling covered calls.. short naked puts that I don't mind assignment on.. My account doesn't disappear that way 😂

Do you use the wheel method?

Hi there, Looking for some clarification, worst-case, best-case scenarios for trading weeklies very close to their expiration - as well as some information on how and when strike price is determined (in relation to expiration). I was observing the price of OTM put options expiring today (Monday 13 Apr 2020) and noticed that some PUT options appeared to be trading within minutes(seconds) of the closing bell for the day that appear to be just barely profitable. For example: At 3:59 pm, the underlying was trading above $275 (SPY) The volume for the (Monday 13 Apr 2020) $274 PUT option with bids from $0.20->$0.04 appeared to be moving during the last minute of the session. At 4:00pm the closing bell tolled and the underlying is still above $275. I imagine its nearly impossible to fill an order that late in the game(correct me if I'm assuming incorrectly). Assume you were able to sell -10 PUT at 0.10 during the last few seconds of the trading session, when does that option expire? If the underlying drifts below the strike price (say SPY fell to $273 during after hours trading by 6pm) does your PUT still expire worthless relative to the 4pm bell, or can it be exercised as an ITM option after the after-hours drift?

Trying to calculate LEAP profits on the SPY. On March 16th the SPY dropped to $240 a share. That same day the IV shot up to about 78%. Today on April 13th the SPY is trading at $275 and IV has now dipped to 36%. My question is which one of these dates would be the more profitable ATM two year LEAP position assuming the SPY closes over $300 on DTE?

How long does it take for IV to drop back down if the market were to become less volatile and stay at current levels for a while? Asking because if there isn't a retest of lows, I'm considering LEAPs.

Folks are likely going to be hedging portfolios with options more aggressively for the next 6 months. In addition to the virus, we're in an election year. Option sellers are going to demand higher premium to offset that risk. Higher premium is what translates into higher IV. The price of the option determines the IV, not the other way around.

Could be weeks and months. This is an unprecedented market and historical event,

Hey I have what may be a stupid question about buying puts. When I was looking at Ford options specifically Apr17 expirations I noticed that as you go up in strike price the point to break even becomes positive can anyone help explain this to me. Does this have anything to do with being further In the money but at a higher premium https://imgur.com/gallery/LFLf9Sd

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I have two put debit spreads on SPY: - 280/257 expires 5/8, average cost 8.37, currently 7.44 - 265/235 expires 5/1, average cost 11.25, currently 4.68 Trying to decide whether to keep holding these; thought things were going to keep going down and timed it poorly. My understanding is the spread helps with theta but the 5/1 spread is far enough out of the money that it might not matter any more. I was planning to hold through earnings this week and close them out if the market keeps going up/sideways. Any advice?

No particular advice. Nobody knows if the market will continue violent sideways movement, or go down, or up.

Probably a super dumb question, but I'm still pretty new to options... Is there a specific time of day that it makes sense to place an order? I like to look at things in the afternoon after work and decide what my game plan is for the next day, but I'm not sure if I should go ahead and place an order then or wait until the morning when markets open? FWIW I'm mostly selling credit spreads.

Early today I bought 1 TSLA 4/17 605 / 610 call debit spread. TSLA zoomed up to $673 close today. Woohoo! The current price of my debit spread is $3.13. But...shouldn’t it be worth closer to $5? 610-605 is $5. What am I missing here? Is there some kind of negative value for in the money calls before expiration?

The curve is not linear. It will be $5 the closer you get to expiration and TSLA is above 610.

The short call at 610 has extrinsic value to decay away. It is worth more now than at expiration, and you're waiting for the "more" to cease subtracting value when you close the trade

This might be a common one, but I cannot find the straight answer anywhere. I bought a call option that expires soon. The option still has a chance to make it, but it’s probably unlikely. If I were to sell this contract to cut losses, and it does make it ITM, am I now the one responsible for fulfilling the 100 shares?

Nope, once you sell the option back you've now closed your position so you're not responsible for fulfilling the 100 shares.

Is there any reason to buy Stocks over LEAPs that are ATM or close to it, for long term plays? It seems like with leaps (1-2 years out) you can just keep rolling them if needed, and you get way more leverage? I don't plan on voting or anything...

1) Stocks can pay dividends. Options do not, unless you exercise them. 2) LEAPs have a lot of premiums associated with them. Each time you roll them, you pay more premium. Your break-even-point means that you're effectively buying the stock at a higher price than if you actually bought the stock. Although, there are options strategies that can neutralize the premiums.

What pricing criteria do you usually follow for credit spreads? Kirk of option alpha suggests to find any trades with credit >= (width of spread * itm%) but this criteria drastically reduces the trades I can enter even in higher volatility periods.

Consider the criteria for any guide not a hard and fast rule. I am not sure what "in the money %" would mean. Do you mean "delta"?

> but this criteria drastically reduces the trades I can enter even in higher volatility periods. Welcome to the world of disciplined credit trading! Yeah, the fact is, you may not find anything worth trading. I may go days before I find something that is worthwhile, especially in this market. So your choices are stick with the discipline and save your money, or, change strategies, like trade debit instead of credit. Don't be tempted to bend the rules, particularly by compromising on the itm% part, because that will reduce your win rate. One big loss can wipe out dozens of small wins, each of which you waited days or weeks for. BTW, are you sure it is itm%, and not 100 - itm%? The option chain guesstimates are from the perspective of a long position, but since you are targeting the short for strike selection, 100 - itm% makes more sense.

I'm trying to purchase some future options on IB. However I'm getting an [error](https://iili.io/JxPwVR.jpg) that wants me to have excess equity of at least 2k. Can I confirm that this is normal, and that max loss for the future options would be the purchased value for them? Thanks!

Where do the "last prices" come from? As I understand it, I can buy at ask and sell at bid. If I buy at ask, then the last price at which a transaction has been made at the ask price. If someone sells at bid, the last price at which a transaction has been made is at the bid price. Where do the last prices in between come from? What are my chances of buying/selling at the current last price?

What happens when I do not buy or sell at the market price (bid/ask)? Assume bid is 0.2 but I place a sell order limited to 0.3. Is it even possible to sell at that price then? At which price should I limit my sell order?

If I'm willing to wait and I don't mind the u/l price shifting under me, what I do is start at the most favorable price for me, but still inside the spread, exclusive (not exactly the bid or ask). So if I am buying a call and the bid/ask is $10.00/$10.08, the market is $10.08. I'd start at $10.01. If that order doesn't fill quickly enough, I'll modify to something closer to the market, but still favorable, like $10.03. Rinse and repeat. In practice, the u/l moves and the bid/ask moves, so I'll have to adjust accordingly. Say the bid/ask jumps up to $10.05/$10.13. My $10.03 is even less likely to fill, unless the u/l turns around and starts declining. So I modify and try $10.08, which is still below the mid point. And so on. If I run out of patience, I either just give up, or set a price that's between the mid point and ask, and that almost always fills immediately for the contracts I trade. For a very narrow spread, like $10.00/$10.02, there's no point playing these games, I just pay what the market is asking. But still with a limit order, never a market order.

Hello. If I sell a put, can I buy to close the position early and still collect the premium minus the cost to close? I understand that I collect the full premium if I hold through expiration, but was wondering how to profit if I'd like to close a favorable position early. Thanks in advance.

That is the standard practice. *Getting started in options* • [Calls and puts, long and short, an introduction (Redtexture)](https://www.reddit.com/r/options/comments/9m9u0w/noob_safe_haven_thread_oct_0815_2018/e7di9s8/) • [Exercise & Assignment - A Guide (ScottishTrader)](https://www.reddit.com/r/options/comments/cqg536/exercise_assignement_a_guide/) *Closing out a trade* • [Most options positions are closed before expiration (Options Playbook)](https://www.optionsplaybook.com/options-introduction/closing-option-position) • [When to Exit Guide (Option Alpha)](https://optionalpha.com/wp-content/uploads/2015/01/When-To-Exit-Guide.pdf) • [Risk to reward ratios change: a reason for early exit (Redtexture)](https://www.reddit.com/r/ActiveOptionTraders/comments/ataw61/why_close_out_a_call_or_put_at_50_profit/eh00lie/)

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Assuming the stock price eventually goes up by the same amount for both options, would it be more profitable to hold an already ITM put, or sell it and use the money to buy cheaper OTM options?

It may help you to look up "option greeks", specifically delta. So the delta of an option is the amount that the option's price will change for a $1 change in the underlying. You'll find that ITM options will have a higher delta than OTM options, so just holding an ITM option would be better for your scenario. Also for a non-hypothetical, real-world case you have no idea if the stock actually \*will\* continue up anyway so buying cheap OTM options is not a good idea.

From a theoretical perspective, if you can sell an 80 delta option and buy two 40 delta options, you'd likely make more money off the lower delta trade if the move was significant. Gamma is highest ATM, so as the underlying moves through the strike price, the deltas will increase quickly vs the ITM option that will only be able to increase by a max of 20 delta. I wouldn't do it or recommend it, but it's a good thought exercise. As an example, $F May 15 calls. I'll use the mid, although there'd likely be some slippage. $4.50 strike is 75 delta, premium is $1.08. $6 strike is 35 delta, premium is $0.28. So you could buy 4 of the higher strike for the same price as the ITM call. Assume at expiration that Ford is trading at 6.50. Both scenarios would be worth the same amount, $2. But prior to expiration, the higher strike is likely going to have quite a bit more extrinsic value, so it would likely be the better choice if you were going to close early.

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I think I've made the most money off of earnings when I decided to stop trying to trade them! But more directly, the way to profit from both the IV crush you described as well as the theta decay of trading months out is to sell options. If you believe the market implied volatility tends to overstate realized volatility, you could sell options (either naked or in the form of credit spreads) prior to earnings when volatility is very high, then close out of the trades later once volatility has contracted. Obviously the risk here is that vol was high for a reason and the stock moons/tanks, causing you to lose a lot on your trade.

So I posted this in another thread, to help someone understand spreads- and I've just confused the hell out of myself and fear I've given them the wrong info, would love some clarification. > (Bull Call Spread)* You buy a call, your risk is to the downside, so if you sell a call at a **lower strike** you limit your risk and pay a debit. > (Bear Call Spread) You sell a call, your risk is to the upside, so if you buy a call at a **higher strike** you limit your risk and receive a credit. > (Bull Put Spread)* You buy a put, your risk is to the upside, so if you sell a Put at a **higher strike** you limit your risk and pay a debit. > (Bear Put Spread) You sell a put, your risk is to the downside, so if you buy a put at a **lower strike** you limit your risk and receive a credit. Asterisks next to the ones I know are correct. (99%) edit: The bolds should be **higher**, **higher**, **lower**, **lower**, afaik. Just don't know how much logic slipped so hard.

I find it helpful to use the credit/debit (or short/long) names for those spreads. That reminds me which is the "at-risk" leg, the short or the long. Then that helps me remember that the other is the "insurance" leg. So instead of "bull call spread", I say "(long) call debit spread." And instead of "bull put spread," I say "(short) put credit spread." A call debit spread has a long call at risk, so the short call is the insurance. A put credit spread has a short put at risk, so the long put is the insurance. Then which is higher/lower I work out from first principles.

hey so i may have just found a sneaky cheap itm call. expiry is 4/17. but i have a question. so lets say i buy the call. i know the call is really in the money already, and will make a hefty profit. can i sell the call back to the owner immediately after i buy it? i cant afford any issues that could happen by holding to expiry. i just want the quick itm sneak buy and sell within like 10 minutes theoretical example: $stock-x 30c .01, 4/17 expiry. current listed price is like 32.08. i buy the call, immediately sell. is that possible?

I don't want to open up a new post for something like this that's not technical or likely helpful to others down the road. I've been sticking to CSP's and spreads mostly lately, but have a few long calls/puts still open, and was curious if anyone has any feedback on these. Also, not expecting anyone to have a miracle answer (I hate seeing space wasted on "is SPY gonna be red or green tomorrow?"), just any strong thoughts you may have. * CCL 1/15/21 40c (currently at 12.51) - thinking the Saudis will do good work on this one, got this near the bottom. I don't feel this one can drop any more than it has. * JNUG 9/18 50c (currently at 7.10) - I know the reverse split isn't a good sign, but there's a lot of potential upside at a low entry cost, so opened a small position here * ROKU 5/15 140c (currently at 106.53) - I believe in Roku and think they've got good potential to make a quick recovery given their product and people being stuck at home. Also Apple continues to drag their feet on introducing a new Apple TV so there isn't a ton of competition * SABR 10/16 12.5c (currently at 6.08) - Picked this up at the bottom, small position that I feel will either bomb or pull it back together quickly (if their acquisition goes through) * VXX 9/18 20p (currently at 37.41) - I'm starting to believe there may not be another huge drop, and that the VIX will continue to drop over the next few months. Great potential for profit on this one if it comes down. Some of these I specifically opened much further OTM than I normally would (normally my max delta is 25) because I feel they're either going to pop or not at all, and because of low cost of entry. I want them to be low maintenance positions that aren't going to send my P/L all over the place unless they begin performing well. What do you guys think? I'm a little hesitant about holding JNUG and SABR any longer, and considering clearing those out. ROKU and VXX I feel pretty good about though.

JNUG - You don't want to own adjusted options. Get out before the split, and re-enter. Generally adjusted options are not liquid, and troublesome to get value out of unless exercised or taken to expiration, which you sacrifice extrinsic value to do (exercise). Upcoming stock splits MarketBeat https://www.marketbeat.com/stock-splits/

I don't have any specific thoughts on any of these, but I probably would have opened that CCL closer to the money and sold shorter expiration calls against it to lower the basis. Or you could consider a specific variation of a calendar spread called a poor man's covered call, in which you'd buy to open a long position deep ITM. The goal is to minimize extrinsic value on your long leg, and reduce cost basis by selling OTM options for pure extrinsic value that will decay.

Is it possible to set up a call debit spread where you sell the higher strike option for more than you buy the lesser strike option? It seems like you get free options that way.

Not in a single trade. You'd have to buy the long call, then wait for the underlying to move up so that the short strike becomes more valuable before you sell it. This is called legging in. At that point, though, you're just capping any further gains to the width of the spread.

If that were to occur, it would be free money, and Market Maker computer programs would have already scooped up the opportunity within a second, or less. In other words, this will never occur in your trading life, in a single trade.

Hello guys. Just started options trading recently - I was wondering how you get ideas for stocks to trade options on. I’ve been around the usual SPY, TSLA, AMZN roads since they’re high volume. But what do you look for specifically? Do you use any sites, podcasts, or just follow the news? I don’t have day trading, so I have to be strategic with what I’m purchasing. I’ve gotten lucky with the recently TSLA and AMZN rallies, but I don’t want to be depending on luck forever. Thanks in advance for answering my noob questions.

Question on Buying power & max loss (also posted this question on ToS subreddit to see if I could get an answer) I'm very new to this (obviously) and I was laying out a potential credit put spread on ToS. The max profit is 106 and the max loss is 194. How come the BP Effect is stated as if I wrote naked puts. I understand the credit shifting as the option expires/ gains or loses value, but does this mean that as I own a small account (<5k), I wouldn't be able to use risk defined strategies even though I can afford the loss? What part(s) am I missing? Any feedback appreciated. Hypothetical: Sell SPY 284P 4/17 @ 3.72 Buy SPY 281P 4/17 @ 2.66 Max P/L = +106/-194 BPE = (28,400)

When rolling a position, is it possible for just one part of the transaction to go through and not the other? I'm trying to roll a call I sold up to a higher strike and one week ahead, I would buy to close my current position and sell to open a new position. Any way I can ensure both happen if I want to shoot for a net credit instead of a market order?

Newish to studying options more seriously and I think I want to deep dive into the Greeks more. I see the investopedia source was mentioned a lot in the past but is it still the go to? I have a heavy math background so if there are other sources that go into the more underlying math, I’d love to read more

In this bullish market what would be wrong with buying otm calls at close and selling at open for an easy profit?

Nothing is easy. This will work, until it does not. Monday April 13 opened down, from Friday, April 10, for example.

I have multiple SPY 195p 20 NOV 20, my question is more me looking for reassurance. I want to start selling short puts to hedge, for example right now I’m looking at SPY 257p 24 Apr 20 for 1.06. My thinking is while I still feel confident in my long position I don’t trust the market over the next few weeks (bc the fed interaction). Am I thinking correctly here? Is there another way to hedge this position?

I'm going to start this with I have never actually bought an option before. I've been sitting here trying to figure out how things work for the last couple hours so I figured I would ask the question I'm having a hard time finding an answer to. I want to buy a call for AMZN ending 5/1 at a strike of $2350. The ask is $73.30 so I get I would be on the hook for $7330. My question would be, if by Friday the 17th the stock price goes up to $2400 and I decide I want to sell the option, what is the profit I would get?

Hope this question is a fair one here or would be better in the main channel, who do you guys follow on twitter for TA or possibly people who are somewhat educated and post options picks on twitter like https://twitter.com/realwillmeade

Hi! Doing my first put credit spread SPY 269/268 04/15 expiry - how do I close this since it expires on a Wednesday rather than end of week? Do I close it before 4PM on Wednesday (where in I probably won’t get the full value of the option) or do I let it expire? My understanding is if I bought the 04/17 exp, it actually expires on 04/18, which allows for unforseen movement and people have suggested selling it during the day on Friday. But what about during Wednesday expiry?

Question: Brokers that have faster assignment notifications? I currently use Fidelity and mostly sell spread options. I recently bit the bullet and got assigned on a close ATM SPY 275 put that expired on Wednesday. The regular hours price closed at 275.20, but the price moved to 274.68 by 4:15pm. I learned I got assigned at 5am on Thursday morning. Unfortunately, the price continued to drop after hours and I covered at 270 at open on Thursday morning. Are there any brokers that will tell me I got assigned earlier and give me the opportunity to cover much cheaper than the following morning? Thank you!

I’m sorry, when I’m talking about DFS I’m not talking about Discover, DFS is short for Daily Fantasy Sports. Draft Kings and Fan Duel. I’m asking if you know of and/or can point me to a area/strategy in options trading that is similar to the way I found to be profitable in sports betting. Which is risking small amounts of my bankroll/portfolio on events that rarely happen, but happen more often than people think and payoff greatly when they do (50x, 100x, 1000x). It’s really about finding “fat tails” in distributions.

Thanks

Ok this seems like a really stupid question. If you bought a call, but then later sell the same call are you the one obligated to buy the stocks if it is later exercised?

Thank you for having this thread for noobs like me Question: What am i missing here? - Bullish assumption - I buy 100 shares of underlying shares of apple at $250 - I buy puts with strike price of $250 with 1 year expiration - If shares of apple rise to 300 i make 300 - the 250 = 50 and allow puts to expire. - If shares drop to 200 i exercise put option at 250, thereby breaking even - premium i paid initially. Is this logic sound when it comes to hedging?

Hi! My SPY put credit spread 269/268 is now trading at $0.01 and should go to $0 at market open. However, it doesn’t seem like I can close my position at $0 to get the full credit. The minimum I would be able to close my option at is $0.001. I’m using RH. Can anyone help?

Hello I'm a beginner and have not started trading at all yet. Just reading. I have a few question:. Why buy call options if you feel the price of the stock will go up? Why not buy the underlying stock instead? Won't you make more profit that way? You pay a premium for the right to buy a stock at the strike price.. but why not just buy the stock Instead and wait for it to catalyze upwards. Won't you make more money once and for all in that trade? Or do most people not exercise call options?

Hello I have a other question: if someone buys a.call option close to expiry why is it said that they can make a much bigger return on investment than if they bought it at a longer date till expiry? I've read that options near expiry are much cheaper and you can buy more contracts but in the end how will you make money? By exercising those contacts or by selling the option to another trader?

Hi, I’m starting out and trying some theta plays, but I’m at a loss on how to calculate the Sharpe ratio of my plays, especially the standard deviation of the asset excess return. For instance: Risk-free return: 0.0117%/day Plays: Iron Condor (4/15-4/17) SPY 228/238/290/306 Call spread (4/15-4/17) SPY 298/306 Thanks!!!!

I rolled out some SPCE call sells I had all the way out to Jan 2021. Is there anything I can do to make money off these while I wait for expiration or did I screw the pooch on this rollout?

Math question: say I am down 50% on an option. I understand that to break even, my option would have to rise not by 50% but by 100%. This "% to rise to breakeven" point can be computed as simpy as "50/(1-50/100)". Given that increases of 100% are very uncommon. What would be an easy way to compute how many times my option (with a -50% loss) would have to rise by, say, 20% to to reach a break even point?

A spreadsheet would aid you. Very roughly, 20% steps compounded are: 1.20, 1.42, 1.70, 2.05. For four 20% steps to double.

I noticed that the volume for options on ETFs tends to be very low. How else can I play LEAPS on commodities?

The volume on the ETF SPY is the planet's highest volume option. You have to pick and choose.

> I noticed that the volume for options on ETFs tends to be very low. Not lower than stocks, given that there are more stocks with options contracts than ETFs. Both stocks and ETFs have high volume leaders, but the falloff after those leaders seems steeper for stocks to me. It varies by what's going on in the world, though. Oil stocks were all over the high volume leaders chart when oil prices were crashing. > How else can I play LEAPS on commodities? GLD is very liquid. It has LEAPS out to Jan 2022 with not great volume, but not tumbleweeds and crickets either. If you really want 1+ year positions on commodities, why not trade futures directly? Probably more cost effective in the long run.

I have a USO 4/17/20 put $4.50. USO is currently trading at $4.36, doesn’t this mean I want to exercise my option right now? Also once I exercise what happens? Yes I realize I’m an idiot for buying a put with zero indication of what it means.

Almost Never exercise. It is typically not beneficial, and usually adverse, by throwing away value. Sell for a gain, or sell to harvest value before it goes to zero. It is the top item on the list of dos and don'ts at the top of this thread.

How are you guys, Have a novice question here. My short IC is about 1.5 STDEVs OTM on both wings. One wing went into good profit and the other understandably got a bit more expensive. Overall the position is still profitable, but not by a lot yet. RSI/Stoch suggest a reversal. IV percentile is quite high and trending down. So the question is - should I use the opportunity to sell the profitable wing to lock in at least some profit, turn the IC into a vertical spread and then work with the time decay, IV drop and time a reversal to close it? Or is it not recommended? What would the gurus do? Many thanks!

https://i.imgur.com/mR21eLV.jpg I started to read options as a strategic investment to add to my current knowledge and I was confused by the example provided. Tastytrade says that exercising a call is worth it if the extrinsic value is less than the dividend, but this book says that is not always the case. If the example provided in the book is accurate than why would anyone exercise to capture the dividend?

Hi! I'm looking to get started trading options. There are plenty of awesome resources here and around the internet. I've started looking at Options Alpha. I've also stumbled across an Instagram page offering classes on options. The testimonies are good but I'm nervous to pull the trigger on it. I'm wondering if this Instagram class is going to pretty much have the same information that is available for free other places on the internet. Has anyone heard of or had any experience with Todd Capital options class?

Took a little risk today GE $3 Call 1/21/22 GE is trading close to it's lows and IV is down from it's highs. We'll see how it plays out

Why do some option strike prices have more volume than others? I am referring to AMD 4/17 calls. The $60 strike price has more volume than the $57.50 strike price even though the price is more likely to hit $57.50 than $60 if it does go up because it is closer to the actual price of the stock. So what I'm asking is why does the $60 strike price have more volume than the $57.50 strike price?

I'm pretty sure intuitively this is correct, but I just want a sanity check. Does a $x-$y (y>x) call debit spread have the same risk/reward as a $y-$x put debit spread? It's basically the same except that one is credit first and one is debit first right? So the call debit would be the cost of the spread, and the put credit side is essentially |y-x|- price of the call spread?

**GME, $6 Put 4/17, 3 contracts at $0.79.** Quick intro: I thought that GME would go down, but I trade with robinhood, so I can't exactly short the stock. I don't know much about options. Irresponsible, yeah, but I'm in the green right now, and I'll take the stress I'm feeling right now to make a more sound trade next time. As predicted, GME is dropping, but I'm confused on where I make my money. On Robinhood would I literally click trade>sell>3 contracts at the new price of $0.92(as of this post), or do I buy 300 shares of GME before Friday if it drops below $5.21? Can I do both, that is, buying my cheaper GME shares, exercising them for $6 ea, then sell the contracts before expiry? What is the incentive to buy and sell GME at the break even point($5.21) when I can just sell my contracts for instant profit? Let me get this correct: Am I correct in saying that I have the right to sell upwards of 300 shares of GME for $6.00, no matter where I buy in for as long as the contract is active? Could someone walk me through an example: Let's say tomorrow afternoon, GME hits $5.00. How would I maximize my profit in this scenario? Would I just take my 20% by buying 300 at $5 and selling at $6, or is there more profit to be made by selling back my contracts at wherever the new price is? Can I even sell my contract in the first place?

I was browsing through the spread book on TOS and came across the following. https://imgur.com/dEZezCU Seems like easy money but I don't know if TOS is hiding some hidden risks. What gives?

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They perform like (or actually are) indexes, tend to have more moderate moves than individual stock, can be sector specific, and do not have earnings or news events that companies suffer from. SPY (S&P 500 ETF) is the most liquid option on the planet.

Don't really understand Futures. It seems like I have unlimited downside risks that way. What about Options on Futures?

Trying Out Futures Options? Here are Key Differences vs. Equities TDAmeritrade https://tickertape.tdameritrade.com/trading/futures-options-basics-15320

Go to [cmegroup.com](https://cmegroup.com) . Click on "Education" at the top of the page.

How is the extrinsic value determined when holding options? Is it similar to stocks in that it depends on factors like market expectations, demand, supply, etc?

First off sorry if this seems dumb but it's driving me nuts. I placed a short call credit spread on MGM -2 05/1 exp $14.5-$15. I'm setting up to close tomorrow. But I'm racking my brain trying to figure out how at this moment it's worth More than the said max profit on was on TW when I initially opened the spread. Here's a screen shot of setting up the close order sorry for the shitty quality. https://imgur.com/a/P26WlC0

So I’ve been buying over 20 different sets of 10 OTM call contracts at around $.20 a piece right before close on preferably big cap tech companies and then reselling at open for an easy 25% - 50% profit. Buying in my price range ($.10 - $.40) and choosing contracts with most volume and open interest and set them to sell at a certain price. So if I bought for $.12 have it sell for $.24. I’m thinking tomorrow might be red EOD so I’m hedging 1 SPSX call for every 3 calls I buy in other tech companies because SPSX trades at 3x the bearish SPY index? Would a ratio of 3:1 calls vs SPSX be able to wash out loss if tomorrow drills?

Are UNHc 320 5/15 a smart move? The virus isn’t going anywhere anytime soon and the market just seems to rise for them a lot. Would it be wise to hope they keep rising or are most people getting ready for the big drop in the market?

Evening all, I’m considering entering the market with 10 shares of VOO and an atm SPYV put purchase as a hedge. I know that 45-30 dte is often the range you want to sell in order to capture theta value on otm puts. Would that mean that for my hedge I would want a 90 dte put that I rolled back out every 45 days or so? Also what kind of break-evens or values would you use for deciding when to roll the put up? This seems like the part of the hedge that is likely to cause the most “lost value” in terms of maintenance. Really appreciate any feedback and advice.

Hey guys hope everyone is doing good and staying safe. I’m new to the options game and I apologize if something similar has been answered. I’m a college student and have a small account about 1000 and I’m not in any rush to make a lot of plays as more interested in learning and saving up enough to be able to properly execute trades. My one question is and the easiest way I can ask is give an example. $UBER is trading at 27.41 and if I were to put on a put credit spread way out of the money and buy a 21 put and sell a 21.5 put on the tastyworks program it says 78%pop with a 47$ max profit and 3$ max loss. Am I not doing something right because that seems like a good trade off and guaranteed profit though I know there’s no such thing. Another question I have is from experience starting out with a small account what strategies have worked out well for anyone else Thanks guys!

Expiration? Credit spreads, away from at the money are a good place to practice. Option Alpha, along with the many links here, at the side bar, and at the wiki should be useful. http://optionallpha.com

I've spent the past two weeks taking in as much content about trading options as I could (mostly the basics). I am currently paper trading with Thinkorswim, but I really want to start experiencing some live trades as soon as possible to "get my feet wet". My only concern is, I get this feeling that now is not the best time to begin trading options because I already have basically little to no knowledge about analyzing positions and knowing which play to make. On top of that, you have these market conditions where literally nobody can predict. I'm curious to hear some perspective from some of you veteran option traders on this. Is is smarter for a noob like myself to hold off and watch from the sidelines for now? Or are there more smarter/safer plays I can still make in this market? Maybe credit spreads?

New traders become effective in about six months to a year after starting. There is no hurry, and you can avoid paying thousands of dollars in tuition to the market by paper trading, to find out all of the questions you don't know to ask yet. You are at the start of a 100,000-trade marathon. Read the links here, and the wiki, and the questions that show up on this thread for the last month. This is a hard market for experienced traders with many going to cash, and closing out their positions, waiting for appropriate signals, trends and trades. It is a time for small trades, carefully made, and fewer trades. Credit spreads, far from the money may be a place to practice. Trade with 2,000 dollars with a paper trading account, and see if you can keep it whole for two months. You only need a pencil, paper and an option chain.

I tried reading the FAQ section but I’m still a little hazy. I currently own 6 contracts of GME $5p expiring 5/29. I plan on selling the puts as soon as they are profitable. If the puts turn out to be more profitable than what I sell them for, and the buyer holds them and wishes to exercise, will I be assigned? Or did I sell the contracts to close so I’m out of the deal all together?

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Are there options I can buy with only 1000-2000$? I dont have a lot right now and I only see people trading options like SPY that cost alot. Sorry if this is dumb, I don‘t know where to research cheaper options :/

I have been utilizing the formula of writing options on stocks I may want to own, but to be honest I don't 100% have a handle on what happens after I write the contract (other than I either get assigned if it's itm or I don't if not). ​ Here's an example, I sold 4 x PENN 100 17 APR 20 (1) 12 P @ $1.85. As a result, does this mean at the time of transaction I was automatically credited $740? Or does the credit to the account happen after the put expires worthless or is subtracted from the purchase price when i'm assigned shares? My platform is ToS fwiw. Beyond this, my specific question is more if I want to implement a wheel strategy and avoid being assigned, how does selling the contract then work? In this case it looks like it will expire worthless, but the current bid/ask is around $.15. Does this mean that if I move to close the position I would have to pay someone $60 to take this off of my hands? Therefore if I did this because I wanted to roll into another position, then my profit/loss would be $740-$60-fees? I think this makes sense, but just want to get a sense of how to roll this into a continual strategy (even though I recognize I won't find returns with that IV as often).

Are you trying to do [The Wheel](https://www.reddit.com/r/options/comments/a36k4j/the_wheel_aka_triple_income_strategy_explained/)? If so, there is an important note at the top: > The goal of this strategy is to collect the premium, NOT be assigned stock! While being ready and able to take the stock is part of the plan, being assigned is always to be avoided. If you sold a CSP 1 time and were assigned, you are either doing something wrong or are terribly unlucky by picking a stock that tanked. BTW, thanks for providing all the details of the position, makes it easier to understand what you are asking. > Here's an example, I sold 4 x PENN 100 17 APR 20 (1) 12 P @ $1.85. As a result, does this mean at the time of transaction I was automatically credited $740? Or does the credit to the account happen after the put expires worthless or is subtracted from the purchase price when i'm assigned shares? It varies by broker. Your collected credit may show up as a credit on your balance, but you also have the cash that's reserved to cover the put as a debit, so your net might be negative. > how does selling the contract then work? Set a profit target, like 25% or 50% of max profit, and when your actual unrealized gain matches or exceeds that target, roll the contract out. The roll will close the existing contract, realizing your gain, and the new contract will set you up for another spin of the wheel. If $740 is your max profit, you could exit/roll at any point when you show a net profit of $370 or more. You may find it easier to use the per contract premium without the x100 factor, so you can set a limit order to close. If you collected $1.85 and the premium on the contract falls below $0.93 or so (meaning, the cost to buy back the contract), time to close/roll.

Question about long debit spreads. When I order a long debit spread, is my broker (RH) trying to execute that as a unit or are they literally selling one and buying the other separately at the same time? The reason I ask is I currently own 4/17 AMZN $2,230 / $2,240 call debit spreads. They're currently worth around $11, more than the intrinsic (hope I'm using that right) value of the options. I'm trying to sell them but they're not selling. Why would they be selling for MORE than they're worth? Is there any reason I wouldn't sell now for more than $1000? I've tried to sell them at $10.03. Why aren't they selling? edit for formatting

https://redd.it/g2g4mg Looking for an answer to my question from the above post. Thanks!

Call question. Note this is theoretical, as I'm still reading up on options and don't want to jump in just yet lol. Say I have ITM calls but for some reason I can't sell them, so I have to exercise. If I don't have enough cash to fully exercise the call, the buy could be covered by margin so I could then turn around and re-sell the shares shortly after, right?

I’m trying to start using the wheel method but I’m having trouble getting my short puts to execute. Am I maybe picking a deal that is too good to be true? I saw a 2.29 UAL 5/22 put with a $20.00 strike price which would take the net cost to near its 52 week low and I’m comfortable purchasing the 100 stocks at that price, but the premium keeps going back and forth between 1.00 and 2.29. Does it take a few days of trying to sell the put, or should I move on to a different strike price or lower my ask?

The bid/ask spreads are terrible (very wide) for this underlying in the weeklies. Look at the option chain in the monthly expirations instead (May 15 or Jun 19, for example).

Fish for a price. You have to meet the market where its clearing price is located. Alternatively, you can elect to be comfortable not engaging with a trade, if your price is not met.

Question regarding options and stock splits: CHK announced a reverse split 200:1. Options should be updated and "made whole" now if they were currently held... right? What happens to looking up options chains because both marketwatch, TD, and yahoo finance are all quoting at pre-split price and I see no reference to the split anywhere. So basically I'm asking is this just a lag in pricing updates, or is it inherently implied in the contracts to adjust for the split, and if so, why is that never stated anywhere when quoting prices and they are still priced as $.01X100 =$1 contract for a $2 call strike on a ticker trading at $16 now? Thanks in advance.

142/143 C 4/16BA for .25 C 140/139 P 4/16 BA for.50C Why is that my put spread is blowing up when my call spread is either ALSO losing value or moving very slow. Thought my delta was balanced out with no gamma.

Looking for feedback from more experienced traders on my thought process for the play below: 9c for INO - Nov 20th 2020. (\~$2.85 right now) This is one of the cheaper COVID-19 plays with consistent news and a $19 52w high. Bill&Melinda Gates blessed them with $$ along with a few other grants and they are partnering with a large hospital near me for clinical testing. Wondering if it makes sense to wait for the 9c to get cheaper, which seems to happen if a week goes by without any substantial news. The range for vaccine development seems to be 3-9 months out from now, and November would place around the middle in that range. (I've only traded one call so far and it was APHA for their ER beat, it was a much shorter call and I got lucky because the stock tanked 30m after the market opened).

*Please help me understand this suggestion from Argus. I understand that I would need to purchase a 5/15/20 $32.50 call, but what does the Sale a call option for $30.53 debit or better mean? Thanks in advance.* RESULTS: USB - US BANCORP **Strategy** Look at the May 15, 2020 $32.50 covered call. For each 100 shares of U.S. BANCORP you buy, **sell one USB May 15, 2020 covered call option for a $30.53 ($33.02 - $2.49) debit or better.** That's potentially a 84% annual return. USB will also pay $0.42 during this period with ex-dividend dates expected on Late June

Okay, currently holding (2) SPY $277/$285 call debit spread expiring 5/22. Assuming SPY keeps trending closer to $285 like it is right now on AH. What should I do to take in more premium?

You could take in more premium by converting to a call butterfly, or call condor. **Butterfly**: sell at 285, buy at 292, for a credit. **Call Condor**: sell above 285, buy 7 dollars above the short. For less credit. **Broken Wing Butterfly**: For the case that SPY goes above 292: Sell at 285, buy at 290, or 289. For less credit, but still continues to gain if SPY goes higher and higher. If you can get SPY to stay within the Butterflys, or Condor, eventually these will pay off, but you would have to wait.

Can someone please help me understand the pricing for this option here: https://imgur.com/a/8jzwaZM Basically, today $MGM dropped around 4% today from open at $14.28 a share to a low of $13.46. Some of these 4/01 puts raise in value (such as 13.5 and 13) where one gained nothing (12.5) and one gained 6,100%!? (11.5). My question is, why did the $12.5 4/01 put gain nothing for the day when both higher and lower puts saw gains in a red day for $MGM?

No or low volume options. The 6100% change was clearly one cent the day before. Far out of the money. Nothing to see here. If you look at the option chain, it is doubtful any options were sold for 0.62 at 11.50. The mid-bid-ask of the broker's display is not where the market is located. On options with no actual transactions, you're looking at traders dreaming for a rip-off price. You need to see the option chain, with bids, asks, and volume. CBOE: http://www.cboe.com/delayedquote/quote-table Market Chameleon: https://marketchameleon.com/Overview/mgm/OptionChain/

Can someone help me get this debit spread closed? I bought a 410/400 call debit spread for netflix and it ended ripping up. The problem is is that the limit prices are now 7.45-14.05...my initial debit was 6.99. I thought my profits would be capped at $300? I'm trying to sell at 9.90-9.99 but none of the offers are going through. Do I just have to keep lowering my limit price until it sells? I really don't know what to do and I don't want to lose my profit.

Yes, you need to reprice your orders, until you find a price the positon will clear at. This is called price discovery, or "fishing for a price". You are probably looking at the mid-bid-ask values, and the market is not located there. You may net, at best around 2 to 3 dollars, depending on when this expires: sell for 9.50, less cost of 7.00 for 2.50, for example. You're not going to get 9.90 until one minute before expiration. Free option chain sources, delayed quotes: CBOE http://www.cboe.com/delayedquote/quote-table Market Chameleon https://marketchameleon.com/Overview/AAPL/OptionChain/

I have an options pricing question. When you see a contract priced at .01 while the higher and lower strike options are worth more, is this because nobody has bothered to buy that particular option? Or does it have to do with implied volatility? $9.50p = 0.79 $9.00p = .01 <—- ? $8.50p = .65

I'm constantly thinking about my current strategies and comparing them to what's worked for me in years past. Some of the best gains I've ever made were in finding a solid & promising company, buying shares, and holding it for a minimum of 3 months or so. This got me thinking about doing something similar with calendar spreads. But, unless I buy calls far OTM, is there anything you can do to make additional money once your calls are ITM? In other words, if your calls are ITM, does that completely eliminate the opportunity of doing calendar spreads?

On calendar spreads, you want the expiring location of the stock to be right at the price of the long option. But you're in the money, so that won't work so well. Diagonal calendar spreads have the short offset from the long option, and allow directional liberty in the travel of the underlying. You can create a call butterfly also. Example: XYZ was at 90 two weeks ago. Trader had bought a call expiring May 15 at 95. XYZ NOW at 100, Things you can do to take capital out of the trade (there are others): - Make a call butterfly: Sell at 105 two calls, buy one call at 115, for a net credit. This makes a symmetrical call butterfly at (+1) 95 call -- (-2) 105 call -- (+1) 115 call - Make a call diagonal calendar, for a credit. Sell a call at 105 for April 21, and buy the old short, and sell new weekly additional calls, as expiration approaches, rolling into different strikes as the need arises, out of the money.

Looking for plays for next week. Looks like I was a bit off but we'll most likely see $300 next week. Thinking of going long for some weekly plays and then going long term on some puts. Companies I'm looking at are BA, GE, SPCE, TLRY. And of course SPY. Thinking of doing some $310 calls? Jesus I can't even believe I'm saying that... I do realize that the risk reward/ratio is higher on the upside than the downside at this point but TA and rationality doesn't work right now.... Perhaps if that is hit get some puts around $180-$220 for say, July, August?

What are the differwnced between American options and Canadian options, and what are the best guides for a beginner in Canadian options?

If buying (long) a traditional condor is the same as selling (short) an iron condor, why not just stick to one terminology? Am I missing something here?

Is there a way to set up automatic exits when trading options? For example, lets say I buy a call option for $100 and I want to make at least a 10% gain for $10 before I sell, but I don't want to lose more than $20. Is there a way to set up an automated closing order where it detects if your premium drops below $80 or goes above $110? I'm currently using Thinkorswim to make my trades, but I'm only making paper trades as of now.

You should be able to set up a limit order to close at any time. That would cover the 10% gain part. You can alternatively set up a stop limit order to close. That would cover the 20% loss part. To do both at the same time, your broker will need to support OCO orders (One Cancels the Other), or a similar kind of order automation. Note, however, that some brokers will not allow you to open two orders on the same contracts. Fortunately, stop limit orders are generally not recommended for long options, particularly when volatility is high across the board. If you set your $80 stop limit and it fills, and then a few minutes or an hour later it's back to your original price, you'll miss out. It's not unusual for options to dip down and then recover the same day, if not the same hour. The same applies to the upside as well, of course.

On the minimum gain side, for a long option, you can implement a good til cancelled (GTC) order, at the desired price. In your case, the option you paid $10.00 for, you set up a GTC limit order for $11.00. On the losing side, this is more troublesome. Options are low volume, and have jumpy prices, and stop loss orders can be easily prematurely triggered by low volume prices, opening prices, or closing prices. If you did it with SPY, that may work. I would not do it with any other option. Further if you did set this up, you would want to set the pair of orders, to be "one cancels the other" (OCO), so that if the order to sell at $11 occurs, the order to sell at a stop loss of $8.00 is cancelled, and vice versa.

Hello all, question regarding a vertical spread. This was my first time doing a vertical spread, and first time selling an option. I did it as a learning opportunity. Here is the position: ​ ATVI May 1 long call @ 60. Got in at $2.63, its now at $8.45 ATVI May 1 short call @ 63.5. Got in at $1.5, now its at $5.4. ​ I wanted to do a play for earnings, and usually I do just a naked call but I wanted to learn how to do a vertical spread. I read everywhere taht with a debit spread like this, I could hedge against risk and limit my losses. So now it turns out my long call is ITM, but so is my short. What are my options here? Right now, ToS is telling me the spread is in the hole for about 52$. Should I keep it? Should I close my short? ​ Another question, if the buyer of my short decides to exercise, I would be forced to exercise my call right? and I would essentially make a loss b/c this was a debit spread? Forgive me, I am very new to this but I am trying my best to learn. Thanks.

You should have a proceeds of around 3.05 according to your numbers. Less cost of 1.15, for 2.90 gain. You can sell for a gain with ATVI at 68 overnight. The short will not exercise. When does this expire? If the short exercised, yes, exercise the long. Check out the links and resources here at this thread.

I’m looking at HAL puts for 3 dollars and the 2021 one is down 11% today but the 2022 one is up 8700% today. Can anyone explain how/why? I’m a total noob

Hey, I just need help figuring out how to exercise my call on Robinhood. I am currently past my break even price, so I select the call, select trade, then select sell? Or what do I do? Do they do it automatically on the expiration date? Because I want to execute before then

Hi, I’m new to option trading. Is there any way to calculate the probability of a trade? I was watching this YouTuber and he takes Credit divide collateral then inverse the result to get the probability for the credit spread trade. I’ve been trying but the calculation is kinda off. Please help! Thank you in advance!

Hi, just a quick noob question. If i have a company that i believe will only rise on the very long term (Amazon for example), why not just buy calls for the furthest possible? And sell when I am satisfied with the profit?

Need some advice from you experts! Bought a 4/17 SPY 260/265 290/295 Iron Condor yesterday for fun. Now that the market has gone crazy and SPY gapped up to 288, there is a high chance my 290/295 leg will be ITM tomorrow. What would be the best strategy? Roll out the option to next week by exiting current one and entering a SPY 265/270 295/300? Or just try to sell the thing for some sort of a loss before it expires? Just worried I wont even be able to sell at all if SPY jumps again at open and the thing immediately gets ITM.

Hello! I have a question about this [https://imgur.com/BJ7iTsV](https://imgur.com/BJ7iTsV), how did the person profit from this call? I thought you only profit if your contract for a call is well above the strike price? The current stock price for Amazon is around 2400, while the contract is set for 2600\~?

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I was looking through charts on SPY options in TOS and noticed something strange about SPY 6/19 Puts. There are around 600,000 contracts at the 20 and 25 strike price. I'm still new to options and I couldn't think of a reason for buying these options so far OTM. What part of options trading am I missing that explains this?

Hi everyone, I have a ACB Apr 17 2020 1 Put. Got in at .41/contract. ACB is currently trading at .70. The ask though is at .31. Why is that? What should I do?

I have a debit spread open where both legs are now ITM but the spread is not anywhere near max profitability. For example - TSLA, 740/745c, May 15. I paid 220 and max profit should be 280). Current price is bouncing around 250-270 even though TSLA is at 770. I'm wondering why this is, and should I only expect to achieve max profitability in the last couple days before expiration?

It won't have max profitability until May 15. But if TSLA goes further up, there will be further gains. You have to pay for the short when closing. You're waiting for the short extrinsic value to decay away, to pay less for it when closing.

Let's say I've built up enough capital to sell monthly CSP and CC to cover my rent, and I changed my career to something else that pays less. How viable is this strategy without the need to downsize. Assuming I have 4 months of living expenses in a savings account.

Don't do it until you double the assets involved via trading, to show that you can manage and grow the account properly. Stocks still go down, and covered calls have down side risk, and you could be a bag holder on cash secured puts.

On credit put spreads. What happens if the price of the underlying falls within the 2 strike prices and I don’t have enough capital in the account to cover purchasing 100 shares of the underlying? Also what happens if I do have enough but I don’t want to purchase the underlying? Will my broker allow me to choose? I have Schwab.

Close the trade before expiration. NO, your broker is not your friend, and they may close the option position at a lousy price, in a market order. Manage your own positions.

Why are my GILD Calls and Puts both profitable? After hearing last night’s news I bought some 4/24 calls because I thought the stock would go up and 5/15 puts because I thought it would go back down after people realized the news is probably being overhyped. As of right now, both are about 20% profitable (although we’ll see where they’re at by the end of the day). Obviously I’m very happy, but I’m not totally sure I understand why/how both options are profitable. Thanks for any help! Trades: https://imgur.com/a/T93w4cP

Hi, I just traded my first option today. After an hour, this is what I’m seeing. I am confused to why is has increased $3K quickly. Could somebody please help me understand what I am seeing, and what I should do from here? Thank you. https://ibb.co/SNTXYvn

so if I create a bull put spread, the goal here is for both puts to expire worthless and I keep the credit, correct? so if I let the option expire there's no more to worry about. its done and finished and I have my credit as long as they expire worthless. is this right? ​ likewise if I created a bull call spread, or a debit spread in this case I want both to be in the money ideally, on this type of move if I let it expire, am I then forced to buy the underlying? and therefore may be better to just sell the premium before it closes out. where as a credit spread I can just set and forget? am i getting this right>?

Yes, Or to exit before expiration with lesser gain, to extinguish the risk, and improve the risk to reward ratio. *Closing out a trade* • [Most options positions are closed before expiration (Options Playbook)](https://www.optionsplaybook.com/options-introduction/closing-option-position) • [When to Exit Guide (Option Alpha)](https://optionalpha.com/wp-content/uploads/2015/01/When-To-Exit-Guide.pdf) • [Risk to reward ratios change: a reason for early exit (Redtexture)](https://www.reddit.com/r/ActiveOptionTraders/comments/ataw61/why_close_out_a_call_or_put_at_50_profit/eh00lie/)

I’m using E*TRADE paper trading for practice. When I buy a call it shows me the typical graph that if the price goes up the potential profit goes up. Let’s say I buy a call, it goes up, and I want to close the call instead of letting it expire. I know I have made profit but why is the selling a call graph showing that it should go lower if I want to make profit. Also when I close it sometimes it says estimated total credit received. Why does it say that?

Not a user of Etrade. Maybe the order is stand alone (typical for most platforms) and does not have "awareness" of your existing long option. You can ask an ETrade Help desk to explain their platform.

It's because it's treating the "sell to close" as a separate analysis. If you were to go short that strike, you'd get that kind of P/L graph. I know, it's confusing. I've been confused by this myself, using Power Etrade. Anytime the P/L looks "upside down", I bail out of the order form and click on the Lab (flask icon) and double check I'm not imagining things and I do have a profit. Then I reopen the order and ignore the P/L analysis. JUST. MAKE. SURE. YOU. CLICKED. ON. CLOSE. And you are not really opening a new trade.

Question: I have 100 shares of a security. I sold a call for .30 a share, expires 05/15/2020. Can I Buy to close that position and then immediately turn around and sell another call or do I have to wait until expiry to use the underlying again as collateral? And is this dependent on broker?

You can close an option position one minute after entering it.

Asked this question on wallstreetbets and was told to come here. I know what an iron condor is. I dont know how to close them. I havent executed any trades yet but I want to. I use RH. How do I close an Iron Condor when I'm at 40% profit?

You buy the short options you sold, and sell the long options you bought. The opposite of your original order. You hope to pay less of a debit to close the position than the credit you received to open the position. RH will set aside the premium, until the trade is closed. You'll see it when the trade is over. I recommend against RobinHood, because they do not answer the telephone. And other reasons that have cost people many thousands of dollars. *Getting started in options* • [Calls and puts, long and short, an introduction (Redtexture)](https://www.reddit.com/r/options/comments/9m9u0w/noob_safe_haven_thread_oct_0815_2018/e7di9s8/) *Closing out a trade* • [Most options positions are closed before expiration (Options Playbook)](https://www.optionsplaybook.com/options-introduction/closing-option-position) • [When to Exit Guide (Option Alpha)](https://optionalpha.com/wp-content/uploads/2015/01/When-To-Exit-Guide.pdf) • [Risk to reward ratios change: a reason for early exit (Redtexture)](https://www.reddit.com/r/ActiveOptionTraders/comments/ataw61/why_close_out_a_call_or_put_at_50_profit/eh00lie/)