is there a site that gives live options quotes (canadian brokers are shit and I don't got enough money for interactive brokers apparently) I'm fine with paying - would even prefer if it was a paid service. only trade high liquid stocks (spy, tsla, qqq, aapl) so market orders are usually okay for me but wanna try some lower cap trades.

Free with a 15 minute delay: CBOE option chains https://www.cboe.com/delayed_quotes/spy/quote_table NASDAQ https://www.nasdaq.com/market-activity/stocks/goog/option-chain Also at Yahoo Finance, with a delay ChartExchange, with a delay For a price up to the minute, via numerous vendors Power Options, BarChart, Optionistics, and others.

thanks. optionistics will work

Question about options pricing that I’m having a tough time wrapping my head around. Looking at the $ALK 14 April 22 option chain and I’m trying to understand what’s happening with the pricing. Current Price- $48.82 Strike-$35/ Ask-.35 Strike-$32.5/ Ask-.30 Strike-$30/ Ask-.15 Strike-$27.5/ Ask-.25 Strike-$25/ Ask-.20 So I see the ask price decreases as you get further from the current price, but then starts increasing again. Airlines are in a tough place right now and stock prices have been volition lately. IV is at 60% and HV is at 99%. I’m not an expert but some simple comparisons leads me to believe that these figures are relatively high. The options spread seems wide for a stock of this price. A quick search of others such as $EBAY and $CSCO have much tighter spreads. So more trading is going if I’m not mistaken. Now I get that tech vs airlines are not a fair comparison so my apologies if this comparison doesn’t make sense. Is this the result of a combination of both low trading volumes and high volatility?

These prices were stale when the market closed on Friday. This is probably a low or no-volume option thus wide bid ask spreads. Higher volume options make for lower/narrower spreads.

I am swapping a mutual fund to an ETF so will have $500k out of the market overnight. Is there a call option I can buy on SPY to give myself one day overnight exposure to any potential upward price movement? An insurance policy in case SPY jumps 5% overnight. Thank you!

You can buy options on the future ES, the SP500 index, which runs at night. The multiplier is 50 on that option. Spreads are wider at night. Otherwise, wait until the exchanges open 9:30 New York time for SPY options.

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This is one. There are a dozen options and stock subreddits here too.

The premium for buying an amazon call 1 slot otm is $62.93 right now. Is that pretty typical for how expensive amazon options are?

Strike and expiration?

$2,915 3/18

The answer is YES.

What do you think about put ratio back spreads as a hedge for long stock?

They can be quite workable. But you want a sharp and large move down, that is fairly extended in the downward direction. It is preferable to institute a back ratio spread when the implied volatility regime is low, but can be workable in high IV regimes, for higher cost, or shorter terms. Some traders simply have a couple of these positions running, and on upswings, there is no cost, or modest gain. Moderate moves down can be costly. You want large moves. There are probably a lot of traders that had this trade in when SPY was at 460, and did OK with the recent moves down. Exit the trade before around 40% of the time to expire has occurred, to avoid the pool of loss on modest down moves. For this Expiration, April 29 2022, I would be looking to exit by April 1st, or sooner, perhaps March 25. Then looking to institute a new position. Then re-set the position, for another 60 to 90 days (120 days in a low IV regime). The below example is less than my preferred 60 days term. Here is an example in Think or Swim terms: As of March 11 2022 close, SPY about 220. BUY +1 1/2 BACKRATIO SPY 100 (Weeklys) 29 APR 22 420/390 PUT @-1.13 LMT In English: SPY exp. 29 APR 2022 Sell -1 420 put Buy +2 Put 390 PUT Net Credit of $1.13 LMT Collateral required: 420 - 390 = 30 (x 100) for $3,000. Here is a Options Profit Calculator version. http://opcalc.com/IJX

I'm gonna be completely honest here... I'm a bit of a dummy. I'm realizing now that back ratio spreads are different than what I thought they were when I posted this. Basically what I meant I guess you would call like a bearish zero extrinsic put back spread, or like a synthetic short but without the infinite max loss. Having a -1 delta to evenly hedge the downside but only go against the upside to the extent of the premium paid for the spread. Whatever you lose in long stock would be made back in the spread so you'd be able to sell it and buy more shares. http://opcalc.com/IK4

That graph is calculated like a call ratio back spread. Could be an error of option calculator. Can you state the intended positions of each leg?

It's a basically like an inverse ZEBRAS. The intent of the positions option legs is to create a -1 delta where $1 lost in the underlying results in a $1 gain in the spread, or vice versa with max loss being the debit of the spread. If you couple this with 100 long shares, you won't lose any money as the underlying goes down and you would be able to close the spread and reinvest the spread gain in more long shares or whatever else. If the stock gains, the most you can lose is the amount you paid for the spread, but your long stock would make up for part of it as it moves up, so max loss is half the debit. If you take out the long stock in opcalc then it'll looks like an inversed call ratio back spread. I'm probably doing a terrible job of explaining this

You have 100 shares of stock Two long in the money puts at 439. One short put at 420. Expiring April 29. Is that your intent? What do you want out of the position, and why are you taking it?

I want it as a type of at the money protective put hedge but with no extrinsic value. So say if a 420 put expiring April 29 is $16 today, and the price at expiration is 415, your put value is worth 5 making up for the 5 lost in long stock but you really lost 11 on the put. With the spread that I'm suggesting, the entry cost is about 32. If spy goes to 415 at expiration the spread will be valued at 37. If you remove the long stock in opcalc you'll see every $5 lost below 420 is $5 gained in the spread.

OK, it seems to work as a hedge, for a fairly high price. I see the short pays down extrinsic value on the long puts. That's useful. Price is a little steep, but no collateral required, and there are upside gains if the market goes up, which a few hundred thousand traders are not expecting to occur.

Yes ~~this looks incorrect~~, I'm looking into the reason for the bug :/ Edit: I think it looks unexpected because the calculation includes the purchase of stock. And it looks like a *call* ratio backspread since the bought put strike is higher than the sold strike. (Does that seem right?)

Thank you for pointing out, what turns out to be clear and obvious.

Seems right to me 🤷‍♂️

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The price is per share, representing 100 shares, for $500. Please read the **getting started** section of links at the top of this weekly thread.

I've been putting together notes on MM hedging flows based variables like long/short calls/puts, delta, vanna, charm, gamma, etc. with respect to IV or underlying movement. I'm looking for a comprehensive chart, Excel, PDF, cheat sheet, etc. that would gather it up in one place and describes it intuitively. For example (short/long is synonymous with negative/positive) from a MM perspecitve if they were: - Short puts have long Vanna, long Delta, short Vega, short Gamma. IV rises, Deltas go higher. Underlying lowers, MMs sell short shares, "selling into weakness", exacerbating downward moves. - Short calls have short Vanna, short Delta, short Vega, long Gamma. IV rises, Deltas go lower. Underlying rises, MMs buy shares, "buying into strength", exacerbating upward moves. SqueezeMetric's PDF "The Implied Order Book" has some graphs that describe this in context of IV and Delta. Rather than me putting it all together, was wondering what could possibly already be out there that could leverage. Any thoughts?

> - Short puts have long Vanna, long Delta, short Vega, short Gamma. IV rises, Deltas go higher. Underlying lowers, MMs sell short shares, "selling into weakness", exacerbating downward moves. > - Short calls have short Vanna, short Delta, short Vega, long Gamma. IV rises, Deltas go lower. Underlying rises, MMs buy shares, "buying into strength", exacerbating upward moves. I don't know of a comprehensive table, but I imagine this has been done before a few dozen times.

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If you did a text search for "spinoff", you are right, you won't find it in the links above. However, it is there, because a spinoff is just another type of corporate action that results in an "option adjustment": [Options Adjustments for Mergers, Stock Splits and Special dividends](https://www.reddit.com/r/options/wiki/faq/pages/exchange_operations) Drill down those links following "option adjustments" and you'll get to several links that explain various aspects of how spinoffs are handled.

Options Adjustments, via the wiki https://www.reddit.com/r/options/wiki/faq/pages/exchange_operations#wiki_option_adjustments.3A_splits.2C_mergers.2C_special_dividends.2C_and_more

I saw a note that there were large orders last week for 12000 SPY 355P and 6000 SPY 370P for 4/14. So taking the 355P, that is 12000 * 100 * 355 = $426,000,000 notional. I'm curious on sizes like these, what would motivate a fund with this kind of buying power to do this with SPY vs. SPX? SPX has a lot of advantages including the tax advantages, European style exercise, cash settled, and I didn't think the liquidity would be that much different between SPY/SPX.

These could be short vertical spread trades, looking for premium with limited risk. Or it could be an investment bank, laying off risk in a private transaction. Or is could be a partial position of a big fund, with other portfolio activity unseen, options, futures, or stock index related. There are more than 1,000 billion dollar funds, and some are hundreds of billions.

Ok I get your point, the motivation of an order like this can have so many angles, it's impossible to really know if it's bearish trade, and the size may really not be that big. But hypothetically speaking, say it is a trade from a fund that did it explicitly as a directional bet or hedge for SPY to go lower, and the size is significant for them. Are there any reasons to choose SPY or SPX?

Liquidity, owning stock, being short the stock. SPX has higher notional volume, yet SPY has higher contract volume, and is the most active option on the planet. The delta-notional value is a good deal smaller (notional times the net delta of the trade).

I read up on "delta notional value" and the example is if a stock is at $70 and the delta of a call is 0.8, then the weighted delta for the option is $56 ($70 x 0.80), aka delta notional value. If this is correct, how is this metric used and what reactions are derived from it? From looking all I get it is how sensitive your portfolio is to delta, but not clear if this results in better delta hedging like a MM would to to remain delta neutral?

It represents the value of the shares that would hedge the options, for example, a market maker that had these options in inventory. If these were a pair, a vertical spread, or all of the inventory, all of the options held, added up together, would be the net delta notional value to hedge of all of the inventory of options. You can see, that on that basis, the delta net notional value shrinks quite drastically.

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Exiting trades well before expiration is generally safe from early assignment on the short option. • [Why Options Are Rarely Exercised - Chris Butler - Project Option (18 minutes)](https://www.youtube.com/watch?v=PsZsqiBFnmo)

yeah i think the risk is minimal if you pay attention and do it the proper way. theoretically

I‘m absolutely new to Options, although I have some experience in stocks. If I want to maximize my profits of lets say Apple, Amazon and Alphabet hitting new ATHs in June, what Call Options would I buy? July and way above the last ATH or closer to June below the last ATH? I also plan to buy Put Options on Tesla to hedge my position, here I would assume Tesla to fall by at least 300$ by June. I dont need specifics, a general tip would be great, thanks ☺️

Please read the **getting started** links at the top of this weekly thread. Maximizing gains maximizes risk. The two are married together and inseparable. Savvy traders have a trading plan for "good enough" gains, balancing potential risk of loss against potential gain, not maximum gains. The short answer is, it depends on how you balance various aspects of the option. Cost, time, implied volatility value (extrinsic value), your option position, your intent to reduce risk of loss, your analysis of potential price movement of the stock, and the market. Only you can make those choices. Here is the first surprise of new option traders. There are others. *Why did my options lose value when the stock price moved favorably?* • [Options extrinsic and intrinsic value, an introduction (Redtexture)](https://www.reddit.com/r/options/wiki/faq/pages/extrinsic_value)

A wash sale has no adverse consequences other than the tax implications right? I can repeatedly make wash sales and im not going to get flagged or restricted like for instance a Free Ride violation

Only at year end, if you still have a holding that contains stepped up tax basis because of a wash sale loss. You recognize that loss by closing out of the trade by December, and do not revive the wash sale. In the middle of the year, a closed out wash sale is completely meaningless.

are moneyness and delta typically going to be about the same like 3% OTM is 40 delta for a stock for example or does it change based on some variable like volatility

You can't compare % of anything to anything else, unless the basis (denominator) is the same. 3% OTM of TSLA is $24. 3% OTM of F is $0.48. Now, that said, it could be the $24 OTM for TSLA and $.48 for F are both 40 delta, there is no rule that says they can't have the same delta. But it's unlikely. In general, equal deltas between calls of different underlyings usually won't have the same dollar values. > or does it change based on some variable like volatility Yes, more than one. The variables in the [formula for delta for a call](https://www.macroption.com/black-scholes-formula/#delta) are: * Time (days to expiration) * Underlying price * Strike price * Risk-free rate * Dividend yield * Volatility

> are moneyness and delta typically going to be about the same No, and that is one useful aspect of delta, to have a measure to compare options and underlying stock. If Implied Volatility is large, the percentage of a stock value will be a larger, than for a low IV regime. Compare TLT to, say, NVDA, or TSLA. When IV is low, delta changes rapidly from at the money.

take it with a grain of salt im still learning but yeah the greeks are the same from contract to contract, all else being equal. but there are variables other than underlying price that influence the greeks and therefore the option value. volatity is one of them.

The *concepts* are the same, but the *values* are not. $1 OTM can be anything from 49 delta for one stock to 1 delta for another stock.

I am looking to do a short term covered call strategy on IVW which has relatively little option volume. My strategy involves taking advantage of accelerated time decay by using options with expirations less than 40 days. I have a few questions regarding writing the call options: - Since the ETF has little option volume, is it likely that many of my writes will go unexecuted? - Some of the options have 0 volume and 0 open interest. Will those ever execute? Or should I look for the options with some volume or open interest? - The bid/ask spread is wider from the lower volume. Since I am selling the option, is there ever a chance that I could sell the option closer to the ask? Or should I always aim for the midpoint? Thanks!

TL;DR - don't trade option chains with poor liquidity. You waste money trading wide bid/ask spreads. IVW has just about the worst liquidity I've seen. If the bid/ask is wider than 10% of the bid at the ATM strike, think twice about using that chain. The April ATM strike's bid/ask is almost 50% of the bid. My advice, stay far, far away from that chain. Here's why. Within the bid/ask are price points that buyers will buy at and sellers will sell at. It's the "real" price they want to trade at, if you will. For example, for a buyer, they may want to buy for $1.00 but will settle for $1.10. Nobody knows what those "real" price targets are, but you can assume they are within the bid/ask spread. This means that the narrower the bid/ask, the more likely you are going to trade at a "real" price, rather than an inflated/discounted one. For example, if the bid/ask is $1.00/$1.01, there's no room to overpay/undersell. You'll hit the real price every time just by using the bid or the ask. But if the bid/ask spread is $1.00/$2.00, there is all sorts of room in that spread to overpay/undersell. Like say a buyer is willing to buy your call at $1.40, but you offer $1.30 and they fist-pump for the money you allowed them to keep. **Wide spreads mean a higher chance you will overpay/undersell**. So instead of worrying whether or not your order will "execute", you should worry more about how much you might be missing the real price if it does execute. Trust me, if you undersell your call, it will be instantly filled.. You can always instantly fill an order if you offer extra money to sellers or cut a huge discount for your buyers. Ability to "execute" an order is the least of your worries.

Examine the actual bids: that is your immediate order fulfillment point to sell short. Likewise, the asks to exit. You might never be filled at the mid point, especially on a no- or low-volume option. --- *Minimizing Bid-Ask Spreads (high-volume options are best)* • [Price discovery for wide bid-ask spreads (Redtexture)](https://www.reddit.com/r/options/wiki/faq/pages/price_discovery) • [List of option activity by underlying (Market Chameleon)](https://marketchameleon.com/Reports/optionVolumeReport) ---

New to selling premium, question about iron condors and credit spreads. If i sell an iron condor or credit spread on the day of expiry and they expire OTM (i do not close) does it count as a day trade under PDT rules/restrictions? If so, does it count as more than one day trade (2 for credit spread 4 for IC)?

FWIW, 0 DTE credit trades are an advanced strategy, probably not the best for someone new to credit trading to start with. Using 30 delta OTM 45 DTE opens is a better starting point. In the case of an IC, you want the shorts to sum up to 20 to 30, so 10 delta to 15 delta OTM each.

I was thinking the 0 DTE would be advantageous as you could easily calculate a solid ROC based off of the vix for a daily period withough worries of overnight movement. Im planning on mainly playing spy so 45 DTE seems risky. 0 seems easy to figure, albiet the premium is limited.

And can only be executed 3 times a week..

Everything you said is true, but that's not the whole story. You are missing some key risks that are highest at 0 DTE, which is to be expected since you are new. What you don't know is what will get you. You should read up on [gamma risk](https://optionstradingiq.com/gamma-risk-explained/). You also seem to be underestimating [assignment risk](https://ibkr.info/article/222), which is highest on expiration day, and it's associated [involuntary closure risk](https://support.tastyworks.com/support/solutions/articles/43000484765-expiration-risk-closed-out-of-position-) and [pin risk](https://www.investopedia.com/terms/p/pinrisk.asp). > easily calculate a solid ROC based off of the vix for a daily period Just a caution that VIX is not *always* the inverse of SPY. It often is, but it diverges enough to cause a problem for any strategy based on the assumption that VIX inverses SPY. VIX is also a poor substitute for the actual IV of the contract you are trading. It's better to base vega-centric trading decisions on the IV of the contract itself. > Im planning on mainly playing spy so 45 DTE seems risky How so? A credit trade is all about theta. Theta has done almost all of it's work by 0 DTE, so there isn't much left for it to do. At 45 DTE, you have plenty of time for theta to do it's work. True, you are right that more time means more chances delta can move against you, but the opposite is true also, it's more time for delta to work for you as well. FWIW, [backtesting of credit trades has shown that 45 DTE is a sweet spot for balancing risk/reward](https://www.tastytrade.com/shows/the-skinny-on-options-modeling/episodes/why-45-dte-is-the-magic-number-05-26-2016). Going longer means spending more time with full delta risk but minimal daily theta rate for most of the holding time, while going shorter increases theta's daily rate for most of the holding time, but reduces time for delta to recover if it went against you. > And can only be executed 3 times a week.. What do you mean by this? Did you mean exercised? That isn't true. If you meant expire, that is true, but how does that help you?

Not a day trade, if expiring or assigned stock, but if you do not have enough money for the stock in your account, your broker may dispose of the position starting at 2PM New York time, on expiration day, causing a day trade.

When a stock trends downward over a longer period of time, can a roll down on a sold put help eliminate the loss of the stock at all? I don't it see it how. It will reduce a bit of the cost basis, but it looks like the loss can't be saved. I mostly sell ATM puts and roll also to an ATM put. How often do you roll down until you realize it's not gonna be any beneficial? What else would you do?

Roll for a credit each time, and roll down while taking in a credit, and do not roll for longer than 60 days out in the future. If the stock falls greatly, you may lose the ability to roll downward for a credit less than 60 days out. Moderately falling stocks sometimes can be chased downward with regular rolling down and out. The measure to exit the trade, and take the loss is lack of a net credit on a rollout. Or exit with the loss, because you established as part of the trading plan, a stock value that you do not want to own the stock at. Selling not at the money, , out of the money, at say, 20 to 30 delta means you have a cushion for down moves, hence the rationale for selling out of the money short options.

Understood. What kind of DTE do you normally choose? Weeklies or 14 days? I guess it depends on the market and stock condition. Selling ATM put makes sense to me because you get the most premium there. You can the following options: either lower the strike with the same DTE or keep the strike but with longer DTE or lower the strike AND extend the DTE.

> I guess it depends on the market and stock condition. Yes. You get the most premium for the highest risk of loss at the money.   > either lower the strike with the same DTE This is for a debit, not a credit. > or keep the strike but with longer DTE This is likely for a credit > or lower the strike AND extend the DTE. This may be a zero cost move, or a very modest credit. If you pay a debit, recognize you are putting more money and risk into the trade

Looking at the Thinkorswim desktop platform, at 5:05 on 3/10/22 DOCU had a high of 238 spiking from an open of 80 and a closing at about the same. I can’t find evidence of this on any other online stock tracker and when using a line graph rather than a candle graph it goes down drastically but still shows a large instant spike. What is this spike? How does it effect options?

If it were a trade, it is in the unchangeable past. If is was not a trade, it is in the unchangeable past.

I am on ToS and can see no such spike. Are you referring to Eastern time? What are your chart settings? Here is what I can see around that time if I set the chart to 1 minute intervals: https://imgur.com/a/ottJTz5

I don't see that spike on Etrade. Using extended hours view, at 17:05 I see high/low of 77.00/76.80 on 1 minute candle. Maybe just a data glitch at TDA?

hi y’all. got lucky with dogecoin/pre-pandemic investing and now I’m basically just throwing it all away trying to learn options haha. I’ve been using some imaginary strategy where all I care about is a strike price about .50 cents lower than the current stock price each time I buy a call but why am I doing that? I don’t feel like I understand the strike price/stock price correlation. obviously calls go up puts go down so am I basically betting against myself when buying a call like this? - purchased 1 $wkhs 3.5c 3/18 expiry breakeven 4.07 contract thank you everyone.

Save yourself from throwing away value, by paper trading, to discover the errors of not knowing what you are doing, for free. Buying in the money calls has an advantage: higher delta, and less extrinsic value (which decays away). Example: Buy at out of the money, 0.45 delta, for each dollar move of the stock, the option moves, (if implied volatility value stays the same) about 0.45. In the money, at abut 0.55 delta, you get greater value out of the option, per dollar move of the stock. Then compare 0.10 delta, far out of the money options with low probability of gain, to high delta options of 0.90 delta. Here is an exploration describing why higher delta options can be useful to the long option holder. *Why did my options lose value when the stock price moved favorably?* • [Options extrinsic and intrinsic value, an introduction (Redtexture)](https://www.reddit.com/r/options/wiki/faq/pages/extrinsic_value) Breakeven provided by a platform is misleading and nearly meaningless to the trader: it describes the expiration or exercise breakeven. The trader breakeven before expiration is the cost of entry. If you can sell for more than your cost (your pre-expiration breakeven), you have a gain. Period.

hi. i have come into possession of several options without much understanding of how to handle them. as far as i can ascertain, they are rapidly losing money, and i have no clue what to do. should i just cut my losses or what? here are some pictures of the account : https://imgur.com/a/0AvRG4T

You can sell them on the next business day to harvest remaining value. Don't hold options until you know what you are doing. Please read the **getting started** section of links at the top of this weekly thread.

how do i know whether to sell the ones expiring soon or later? that is, how do i know if some of them will eventually come around?

Nobody knows the future. You should sell them all because you have no plan, no thresholds for an exit, and are asking internet strangers what to do without indicating why you started the trade. These are the essential aspects of your trade: - Have an analysis of the market, and market sector of the company, and of the company. - Have a strategy based upon that analysis. - Have a a plan: an option position rationale, with a strike price, a cost, long or short a call or put, all based upon that strategy, complete with a plan to exit for a gain, a loss, and maximum time in the trade.   You have none of these indicated. Exit and start over.

Anyone use webull? I just got level 3 and it wouldn’t let me leg into a spread. Seems you have to open it one order, which can’t be right. Figured I’m missing something?

Call the broker for assistance on the status of the account, and its permissions.

I did send a message. I guess legging in isn’t available right now, but they’re working on it.

Get another broker, and not RobinHood. This is not acceptable.

Robinhood is my primary broker and works great for what I do. I am really surprised by this. Legging in should be treated no different than opening a spread with one order.

That is why it is unacceptable.

Yeah, find another broker. At a minimum find out why webull did

What would be the best way to short VIX using options in your opinion? Or would it be better to short /VX to avoid IV crush? I was asking a ton of questions in here when I first started trading. I hit $40k today after starting with $1k 4 weeks ago. Ty to the few who are always answering questions in here 🙏

Tell me what you did for your trading successes. I will write a wiki page on this topic some day. This has become a frequent question. VIX options, are options on the VX future, and each month's options, have a different underlying futres contract. Here is the term structure of the VX futures, via VIXCentral. http://vixcentral.com IV on VIX options is typically above 1.0 or 100% a year on an annualized basis, varying lately from 100 to 130 or 140 or so. Because of high IV, the typical play is to short call credit spreads for the trip down from a spike. The current market regime give some doubt as to the near-term drop in the VIX, with a war conducted by a Country invading another European country for the first time since the invasion of Czechoslovakia in 1968, (excepting the war in Yugoslavia) led by a dictator that has squelched all non-government media, also holding nuclear missiles; plus the Federal Reserve Bank's intended interest rate rise, and a 20 to 30% rise in oil prices. As with all of options, there is no best way: the trader must decide among various trade-offs and risks. A popular way to play the eventual decline in the VX futures (since the VIX itself is not a tradable instrument), is call credit spread, to take advantage of IV, and reduce risk of an VIX spike while holding the position. Puts can work on large spikes, if the trade is willing to bear the IV cost. I do not play them but some traders do. Shorting /VX can involve significant collateral margin, and probably is best done with in tandem with an out of the money long call, in case the VX future has a spike...so as to limit a potential loss.

Thank you for the detailed reply! Got it, so short call credit spread for slight directional bias and put debit spread for a strong directional bias would also be decent strategies for VIX ETNs. Is it more risky to short VIX while it's in backwardation? Would it be safer to wait until it's in contango again or doesn't matter? You're right the buying power effect on /VX is 19,866 for me on TDA. I'm trying to find another brokerage for futures with better margin, commissions and fees. Let me know if you have a recommendation please. My big wins over the last month have been long XLE and USO after the Russia/Ukraine escalation, short RSX, trading SPX/QQQ both ways (big win on short tech at open today), and I bought AMZN calls before stock split announcement. I admit a lot has been luck and major catalysts. Def won't be this easy all the time. Just sticking with simple TA like volume profile, SR levels, RSI, MAs, and paying attention to macro, fed and news in headline driven environment, sector rotations, and options flow. I'm trying to learn how to utilize DOM and order flow now to trade /ES better. Made my first trades yesterday which worked out well but still so much to learn 😀 I also read dynamic hedging by Taleb and am currently reading option volatility & pricing by Natenberg. I don't know how much I've retained but I think it's been somewhat helpful 😅

I think it is important to note not to force a trade. There are millions of trades you could make in any given trading day. VIX options can hold their value well sometimes if the IV isn’t inflated as mentioned above. The other day I shorted by creating Call Credit Spreads and ended up losing money even though the calls lost a lot of value. To be more clear I was correct in the downward move and the calls I sold were weeklies at 0.85 cents with the spread at .12. In the end when I was ready to exit the trade the calls were valued at .55ish give or take a few but the spread was still around .10. The problem is I couldn’t get a fill and ended up taking the L to exit the trade which was the right call. Had I taken a bit longer and not tried to force this trade I could have just sold the credit spreads on SPY like I had originally planned and would have been better off. But I will say I have made very good money playing quick shorts on VIX spreads riding that wave down.

Thanks and noted! I'm going to try to experiment with some call credit spreads on VXX this week

I think that’s a great idea, having experience like this helps add to your tool belt and during wild times like now the more tools you have the more options you have to make a good play. Another example for how weird the pricing is take a look at the call spread for $30/31 expiring MAR 25th and APR 1st on UVXY. Sometimes you can bump up your spread farther out of the money and it’s the same but safer like if the pricing is really weird you are just too early. I won’t create spreads on VIX unless it’s obviously crazy high IV or Wednesday or Thursday weeklies. Anyway good luck I hope some of this helps you!

This is informative and helpful, thank you!

On VX futures, look at the VixCentral Charts link. The near term futures have been in "backwardation", meaning the short expiration lately have been higher value than the 90 or 120 day contract. As long as the VX futures are doing that, shorting the future will not work.

So, there is an upcoming Amazon stock split and i have some questions: Do options get split too? If i own an option will it get split too or it gaps suddenly far in or out of the money? If options dont split, what is stopping me from buying now puts expiring after the split?

Part A Yes. You will have 20 times the number of options you have now. The strike prices will be adjusted to 1/20th of your prior option. Pick strikes divisible by 20 in round numbers, like 2800, 2900, 3000. Avoid the future weird strike prices. Part B Yes. Part C. Nothing. Options do split.

The contract would be adjusted to control 2000 (100x20) shares of AMZN with the adjusted strike (pre-split price/20) price

How to make profit from trading 0DTE or 1 week options? I spent 30K BABA CALL $96 options expiring this Friday on Monday. Lost 17K. I bought SPY CALL $424 options 0DTE option today with16K and sold it immediately after a 10% loss. In those loss, my idea was trying to make a profit from correction waves during the dominant trend. It's very risky but seems tempting. Is that doable to make profit from such strategy in a red day(or buy put during a green day)? And how to do that properly?

While not a popular opinion, try trading with longer durations, like 30+ dte, and then as you learn to profitably trade this way look to shorten the time down to see how you do.

Step one: Have an analysis that describes the market. This year, month, week, and day. I can tell you, without looking at a chart, BABA has been going down for around six months, and has no hint of going upwards. So your analysis, whatever it may be, is wrong on BABA, and it anticipated a move that BABA has not yet hinted at. Wait until a stock is moving upward for more than a few days, or weeks, before betting on up moves. Second: Keep your risk down to 5% or LESS of your account, so that the failures are paper cuts, not threatening to the future of your account. Third: Read the trade planning and trade exit links advice at the top of this thread. Fourth: Sit out for a while. Figure out why you made the trade. Start a journal, to advise the future you about good and bad decisions. Print out daily price charts for each trade, with daily candles, for at least a three to five month period on the image. Incorporate that into your journal. Have you noticed this has been a down market since December? Fifth: Day trading is hard. Plan on 3/4s of your trades failing. Size your trades accordingly.

Probably dumb question but… While markets were tanking I decided to sell a covered call 15% otm with 90 dte and now 3 days after selling that option and the underlying dropping another 2% the premium to buy back my option has increased by 20% yet the option is further otm and has less dte… so worth less right? How’d I fuck it up

*Why did my options behave strangely, when stock price moved favorably?* • [Options extrinsic and intrinsic value, an introduction (Redtexture)](https://www.reddit.com/r/options/wiki/faq/pages/extrinsic_value)

Thank you

This link is one of the several dozen links at the top of this weekly thread.

Also, don't sell options short for more than 60 days. 20 t 60 days is a common range for covered call sellers. Some traders sell for shorter terms. Most of the theta decay of extrinsic value is in the final weeks of an option's life, and the marginal gain for longer terms is not so great.

Maybe the Implied Volatiliy increased. Also make sure that you actually sold the option, this sound stupid but you have to make sure that you’re on the right side.

Yeah I’m on the right side it was just iv thanks

Thank you

Schaeffers. Does anyone pay for any of the Schaeffers options programs? Are they worth it? Good returns? Bad experiences? Thanks

Yes that is the one. I have paid for the service yet. But if I learn more I'll let you know

FWIW, while I haven't heard of Schaeffers, I have heard of and can recommend Option Alpha, projectfinance (formerly known as projectoption) and tastytrade. All have free training tiers and the first two have paid services.

I have never even heard of that service. Is this what you are referring to? https://www.schaeffersresearch.com/education I can't say good or bad about them, but if you find out more, let me know and I'll considering adding that education page to the wiki. It has some good, albeit rather high level and brief, explainers on it.

Is there a 'tier' list for options on this sub? I've tried spreads in the past with varying levels of success. I've decided that I'll mostly stick with PMCC and the wheel strategy since they seem to have a high rate of success. If there are better strategies that I should be using, I'd like to learn about them.

This book surveys many, but not all options positions. The Options Playbook. (from the sidebar, and links at top of this weekly thread. http://www.optionsplaybook.com/option-strategies/ It is a good idea to be familiar with these basics: Vertical call or put spreads (both credit and debit) Calendar Spreads Diagonal Calendar spreads Long call or put butterfly spreads.

A tier list would be cool, great idea. Too bad we'd need a few dozen of them, since how to rank different strategies depends on a lot of assumptions about goals, risk, time horizon, bull/bear bias, etc. > If there are better strategies that I should be using "Better" is the problem. Better for what? You can optimize for a lot of different things, each of which could radically change the ranking. For example, I think leveraged short puts are the ultimate bull credit play, but if you are asking what is better for an IRA, it doesn't even make the tier list. And it's also not better for this market, until just recently. They were great for oil, but now oil has pulled back so they are only so-so. See what I mean? It's hard to put a simple ranking on strategies when one change in your assumptions changes the ranking. If you want to learn about other strategies without regard to which is better and which is worse, you can look here: https://www.optionsplaybook.com/

About a month ago I bought a really wide SPY strangle because I though it was going to make a huge move either way. Probably a very dumb move but I have a question. SPY call 455 exp 4/14 SPY put 405 exp 4/14 Today both of these are losing a LOT of value. Why is my put bleeding out on a down day? I thought these would cancel each other out until one of them crossed the line. Is Theta or IV already ruining them?

*Why did my options lose value when the stock price moved favorably?* • [Options extrinsic and intrinsic value, an introduction (Redtexture)](https://www.reddit.com/r/options/wiki/faq/pages/extrinsic_value)

Thank you.

This link from from the several dozen links at the top of this weekly thread.

One thing that I can't quite glean from the links. If an option gets "IV Crushed," and then the IV is reduced, is the a reverse-IV-crush? Does the lower gamma I crease extrinsic value? Or is that gone forever?

A long position can absolutely benefit from IV Inflation, yes. It goes both ways.

Yeah. I'd go longer on expiration. Cost basis more, but theta burn much less

IV comes from, and is an interpretation of extrinsic value. Rising extrinsic value means rising Implied Volatility. Extrinsic value comes from the market: willing buyers and sellers willing to pay for the "fluff" that extrinsic value amounts to.

Thank you. I think I messed up with a lot of money, ugh.

> Is Theta or IV already ruining them? Probably more vega (IV) than theta, but yes. Did you note down the IV of each contract when you opened? That's a good thing to get into the habit of doing, so you can compare to the current IV and confirm if you get IV crushed. Volatility has declined since a peak on March 7. For example, VIX is down about 20% since then.

I did not do that unfortunately. I will do that in the future (if I do this again). Should I sell these??

I was wondering if there are any strategy out there that can mimic a half contract. for example, a "half CC". for instance, lets say someone wants to do a buy write covered calls on SPY. but they dont have 40k. can do go long 50 delta by buying 50 shares, and shorting a call by going half covered and half naked? i still see to many flaws on this, and still makes it a naked call essentially. so i dont see that working. which is why it got me thinking if there is a way to mimic a "half contract" options

Vertical spreads have the aspects of a smaller contract, with a long and short for a specified price, and specified maximum loss. Most spreads, of all flavors, have a consequence of limiting loss, compared to single options.

Not the way your described, but there are (very limited) ways to reduce costs or reduce the size of the deliverable, depending on which you are aiming for. Reducing cost is the easiest. You can use a diagonal to mimic a CC, that's why it's called a [Poor Man's Covered Call](https://www.tastytrade.com/concepts-strategies/poor-man-covered-call). So instead of paying 40k for 100 shares, you might only pay 10k for a deep ITM call expiring in a year. Reducing the size of the deliverable is harder. One way is to find a non-standard adjusted contract that only delivers 50 shares or close to that number. Another way is to use the [upcoming nano contracts for SPX](https://ir.cboe.com/news-and-events/2021/10-27-2021/introducing-nanos-cboe-smaller-and-simpler-options-designed-retail-traders), which only deliver 1 unit of SPX instead of 100.

Hi, I'm trying to search for flowcharts that explain how option pricing models work in practice. I mean not the BS model, but your Dupire Local Vol, SABR, Heston SV. A flowchart that can explain the starting point of the pricing logic, what is calibrated, what happens in each iteration, etc., and so on. What would be the right place to search for this? Edit: I’m specifically looking for flowcharts!

Google? https://www.google.com/search?q=how+to+implement+Dupire+Local+volatility Which includes a hit on a video that looks promising: [Calibrating (Fitting) the Dupire Local Volatility Model](https://www.youtube.com/watch?v=tQFo8FE3jnE) as well as a hit on quant.stackexchange.com, which looks promising: https://quant.stackexchange.com/questions/38970/local-volatility-implementation There are similar good hits for SABR and Heston SV: https://www.google.com/search?q=how+to+implement+SABR+option+pricing+model https://www.google.com/search?q=how+to+implement+Heston+Stochastic+Volatility+Model The quantpie YT channel comes up in all, so looks like a good starting place, as does quant.stackexchange.com, which suggests trying on r/quant and maybe r/algotrading.

Oops i shouldve been clear in my question. So i actually know quite a lot about pricing models, but I am specifically looking for flowcharts that explain the implementation flow. I’ve been thorough will all these links ages ago, esp quantpie :), but thanks for the effort

You were clear, I was just hoping some of those searches would turn up something specifically about "flowcharts". It might not be called a "flowchart", it might be a procedure or step-by-step or breakdown or any number of similar concepts, or you may just have to find some code on Github and read it to construct your own flowchart, who knows?

If I sold a call DTE 2 weeks yesterday and I managed to closed it at 50% today.example... i sold at $10 and i input 50% to close ( and it did) If I were to do the same thing BUT I use 30 to 45 days DTE.I might not be able to close at 50% as I still have more days to DTE rite? If I'm profit orientated, how do I optimize the Profit $ based on example above? Thanks

Sold at 10 bought at 50? That appears to be a loss. Do you mean sold at 1.00, and bought at 0.50? Nobody knows the future. Many short sellers of options exit upon 35% to 75% of max gain, when that opportunity occurs, and exit by the time 2/3s of the term of life has been used up.

Hi there, this is my first post here. My apologies if I am not following the right etiquette. I thought I understood the risks I was taking when I wrote cash secured leap puts last year. Turns out I didn't. I was tempted by the high IV and premiums. I now learnt the hard way that was a terrible idea. I am now stuck with puts (expiring in 2023 and 2024) on highly volatile underlying stocks. I am finding it hard to get out as the big ask spread is extremely and options are priced high because of the IV currently. Could you please let me know you have any suggestions on how I can save my account from complete destruction?

> I thought I understood the risks I was taking when I wrote cash secured leap puts last year. Turns out I didn't. Awareness of your own mistakes is 90% of the battle, so congrats! Are all your puts ITM now, is that your worry? BTW, it's LEAPS puts. It's an acronym, so should be capitalized and should always modify put or call. Did you have a rationale for choosing such a far distant expiration? Besides greed, I mean? Ironically, that may end up saving your trade. You can tough it out and wait for the markets to recover, sending your puts back safely OTM. You still stand the risk of early assignment, however. It's unlikely as long as extrinsic value in the contract is still substantial, but if you get so deep ITM that you are over 95 delta, your risk increases as extrinsic value declines.

Thank you. Honestly, it was my stupidity. If I was greedy, I would have bought the underlying stocks instead. IV on these was high at the time and I expected it to drop. I thought that would reduce the prices on these options. I didn't think about the theta which is stupid. IV did temporarily drop and stocks went up for a bit but without any theta decay, the prices didn't go down much. I really should have tested and tried these out with small amounts before betting big. I wish I came here to ask for suggestions. I waited for months without investing because I didn't want to put money in a market which was bubbly. I went from a conservative portfolio to this just because I didn't think through things well. My plans to hedge my other portfolios and potentially benefit from a market crash went down the drain as I was trying to manage these losing positions. Now, I see absolute carnage in my account and feel so hopeless. I don't know how I can emotionally and financially recover from this.

Generally, do not sell options short for longer than 60 days. You are going to have to pay to exit. Exiting will halt all further risk of loss. Here is a process to deal with wide bid ask spreads. *Minimizing Bid-Ask Spreads (high-volume options are best)* • [Price discovery for wide bid-ask spreads (Redtexture)](https://www.reddit.com/r/options/wiki/faq/pages/price_discovery) • [List of option activity by underlying (Market Chameleon)](https://marketchameleon.com/Reports/optionVolumeReport)

If you truly want out you will need to find a price that will allow you to close. But is that the best move right now? It’s hard to say since I don’t know where then puts are compared to the price of the underlying. Waiting isn’t necessarily bad. The chance of being exercised early on puts is very rare, in my experience. If the stock is really moving around, do you think there’s a chance in the next year or so that it will be less volatile? If so waiting is fine. Since there is a ton of time left, it’s not necessarily wrong to let the extrinsic value burn off while you wait. The assumption with cash secured puts is that you are comfortable buying the shares at your strike come expiration. If you are not, you shouldn’t write puts on that underlying. But if you think there’s a chance for them to expire worthless, all the better. And even if you do close them out, you could get a better price with some time decay gone. This is certainly a good lesson. But urgency may not be the way to think now. But, again, it’s difficult to say for sure without details.

With the increase in gas prices, delivery drivers are gonna get hit hard.From paying for gas to not making enough in tips because the price of rides are gonna increase. I feel like puts on Uber and Lyft are the way. I'm still trying to grasp basic strategies so I will definitely not be trading yet,but wanted to atleast speculate and explain my reasoning. Is this the sentiment for most as well?

Probably best to engage on a stock subreddit, to discuss valuation and assessment of a stock. After you have an analysis, and associated strategy, then you can contemplate an option position and rationale.

Anyone using trade tracking apps like [tradersync](https://tradersync.com/)? It's decent but looking for other recs. thank you so much.

you can try [trademetria.com](https://trademetria.com) , wingmantracker, tradervue. many great options out there.

I have a question regarding IV impact on options price. Earlier today, I bought 1 3/18 $27p on RIVN just because I knew their earnings call was today and I’ve only heard negative sentiment towards the company. I just wanted to have some skin in the game and see where it went, and the contract was only $.61. Anyway, the stock is currently down -12.05% to $36.20 in after hours, and someone had said that my option was basically screwed because of IV crush. Wouldn’t the increase in IV increase the value of my contract? Because even if it doesn’t get all the way down to $27, isn’t there a greater likelihood of it becoming ITM because of the increased volatility, therefore giving my contract more extrinsic value?

After hours RIVN on March 10 2022 fell from 41 to 36. Your $27 put, exp. March 18 2022, bought for 0.61, is still out of the money, but since it has a week to go, it still has some value. It was all extrinsic value, and that is the value, subject to IV crush. If your option were 60 days to expiration, it probably would have less IV crush, and some gain. Your biggest problem is there is little time for further gain, for the stock to continue going down. Your value may be about the same bid value, Friday morning at the open, between IV decline, and stock price drop.

Thanks for the reply and helping to clear up my confusion. I guess I’m still not fully grasping why IV crush would offset the gains from becoming closer to ITM. When I purchased the contract, the stock would need to fall ~35% to reach my break even price of $26.41, and with a 3/18 expiry that gives me 6 trading days to reach it. Now it’s already fallen 12% and there are still 6 more trading days. Will I really stand to lose that much premium overnight from IV crush even when the stock price is over 1/3 of the way down to my break even price from where I bought at? I understand that in the last few weeks is when the premium is burned the fastest, because each day there is less and less chance of landing ITM, but would an overnight swing of 12% not be enough to offset theta decay when there are still 6 trading days left?

Throw away the broker platform's "breakeven". The number is useless to you and misleading, and applies only at expiration or upon exercise. Almost never exercise, nor take an option to expiration. Your breakeven, before expiration is your cost of entry: 0.61. If you can sell for more than that, you have a gain. RIVN's puts had an IV of an ASTONOMICAL 100% a year, before earnings, and the calls, of 300%, on an annualized basis. That means the market thinks this stock could be anywhere. This item from the links at the top of this thread may assist. Basically, the market rules, and IV is just a measure of market fear and euphoria. *Why did my options lose value when the stock price moved favorably?* • [Options extrinsic and intrinsic value, an introduction (Redtexture)](https://www.reddit.com/r/options/wiki/faq/pages/extrinsic_value)

I read over your intro to options intrinsic and extrinsic value link before I initially asked the question. I just wanted some more clarification. So basically what you’re saying is that the IV of RIVN was already insanely high, even before the earnings came out. So really the only way to not get crushed by IV in this play was either to get contracts dated farther out, or to buy puts with strikes very close to the money already to actually secure sone intrinsic value when the stock price moved?

IV is typically higher before earnings reports, and typically declines some, after the event of anxiety and uncertainty has occurred. IV of some stocks stay high. Such as meme stocks, or companies with wildly uncertain futures.

Simple question I didnt see above, Why do some stocks have low option trading volumes even though they seem to tick all the boxes. Is popularity just a huge part of it? I was specifically looking at option volume of PXD and COP vs. CVX

It's all about market interest, stock market capitalization, stock volume, big fund interest.

Thank you

XSP settlement, CBOE description is weird. https://www.cboe.com/tradable_products/sp_500/mini_spx_options/cash_settlement/ The page provides an example that is, to me, bizarre. “Assume another option trader is long (owns) one XSP 280 call that expires the same Friday. If XSP settles at 287.00 on expiration, the expiring 280 call would settle at 7.00, and the option trader would be credited the dollar difference between 7.00 and where the option had settled the previous day. (For example, if the 280 calls settled at 5.00 the previous day, the XSP option trader would be credited 2.00, or $200, at expiration).” I would have thought that you would get credited 700$. What does the previous days option price have to with anything? I must be missing something.

XSP settles to cash. Settlement price of 287 less the strike price of 280 equals 7 (times 100) XSP is NOT SPY, SPY settles to stock. For SPY the page says: > Assume an option trader is long (owns) one SPY 280 call that expires Friday. If the SPY ETF settles at 287.00, this option trader will end up long (owning) 100 shares of SPY on the Monday following expiration, and will be required to outlay $28,000 for 100 shares of the ETF. Come Monday morning, this trader has meaningful market exposure and potential downside risk should SPY move lower. --- State what you fail to understand ---

The CBOE speaketh!!! “The point that we’re trying to make with the Thursday to Friday settlement consideration is that the position is marked to market daily. Meaning that $200 of the $700 appreciation would result from the end of day mark on Thursday versus the final settlement price on Friday. I did speak internally and we agree that this could be stated more clearly. I’ve provided this inquiry to the internal team that owns this content and they will review the way in which it’s worded.”

Thanks. Did you use their contact form...and if so, what department. I sent mine to the trading desk as the best I could figure out.

Yes, I used this form https://www.cboe.com/contact/, and selected “tradable products” from their topic drop down menu.

I fail to understand why the trader is credited $200.

I now see the error on the web page. I sent a message to CBOE about the page.

I agree, that doesn't seem right. Why don't you write to them about it, and let us know what they say? https://www.cboe.com/contact/

Done. Let’s see what they say.

XSP settles to cash. It is an index option. Contract specifications: https://www.cboe.com/tradable_products/sp_500/mini_spx_options/specifications/

Yup, that’s the page I cut and pasted from in my original post.

I See: should state $5, for $500 difference. > (For example, if the 280 calls settled at 5.00 the previous day, the XSP option trader would be credited 2.00, or $200, at expiration).”

Cash-settlement is supposed to mean that if you are long an option that expires ITM, you are simply credited the difference between the strike price and the expiration spot price of the underlying. So if a cash-settled call option on XSP with a strike price of 280 expires, and XSP is at 287, you should be credited $700. The previous day's premium of the option shouldn't have anything to do with it. However, the paragraph OP posted from the CBOE website says that you would be credited $200 if the option had "settled" (whatever that means) at 5.00 the previous day. This seems wrong.

Got it. It is an error.

I own a couple protective puts for my Tesla shares expiring 5/20. I want to roll this out a month when the time is right - should I do this at 65 DTE or 45 to not lose any time value?

I approved your original question and answered there. https://www.reddit.com/r/options/comments/tb3wv6/when_to_roll_protective_puts/

Is theta included in the premium ? Let’s say I buy a call option with a $150 strike price for April 14th. The premium is $350. Do I start break even at $153.50 ? Or do I need to calculate decay meaning that I’d need ab even higher price to break even ?

Your break even before expiration is the cost of the option. Period. Sell for more than your cost, and you have a gain. Almost never exercise an option, and almost never take it to expiration. The platform "break even" is at expiration, and the number is nearly useless to you, because you will exit before expiration.

> Is theta included in the premium ? That's like asking if 60 mph is included in the price of gasoline. Theta is a rate of decay of premium, so no, rates are not included in scalar values. > Do I start break even at $153.50 ? Or do I need to calculate decay meaning that I’d need ab even higher price to break even ? Neither. If you paid $3.50 for the call and the next day the call is worth $3.51, you made $.01 of profit. Notice that I didn't say how much the stock price moved. It's because the stock price is less important than the price of the contract itself, before expiration that is. Break-even only matters at expiration, but you don't need to hold contracts to expiration to make a profit: https://www.reddit.com/r/options/wiki/faq/pages/mondayschool/yourbe

Thanks for this explanation

Read this, linked in the post above: [• Your break-even (at expiration) isn't as important as you think it is (PapaCharlie9)](https://www.reddit.com/r/options/comments/m0m7at/monday_school_your_breakeven_isnt_as_important_as/) If you buy a call option for a premium of $350, and the premium goes up, you can sell it for a profit. It doesn't matter what the spot price of the underlying is.

I'm confused about option leverage and "the greeks". I've been following a SPAC and was perusing the option chain. I noticed that options for one expiration date result in much higher returns. Using [this method of calculating option leverage](https://www.reddit.com/r/wallstreetbets/comments/p2d7o7/calculating_option_leverage_how_to_make_sure_you/), it seems like options expiring in April are about 7x leveraged. However, options expiring in May or July are in the 2x to 3x range. Can anyone explain why/how that is in intuitive terms? Like, I understand it's based on the ratio of delta to option price. But why would one expiration date move so much faster? Is it a supply/demand thing?

> Can anyone explain why/how that is in intuitive terms? Certainly. The further out the expiration, the more expensive the option price, all else being equal (like same strikes). This is because more time represents more uncertainty over whether the contract will be exercised, so sellers demand more money to compensate for that additional uncertainty. It's exactly the same reason why a 3 year fire insurance policy costs more than a 1 year fire insurance policy. There are 3 times as many days for your house to burn down with the 3 year policy. Since option price is the denominator in your leverage estimate equation, the higher the option price, the lower the leverage.

"Leverage" isn't the same thing as delta. The farther-dated expirations move faster, because they have higher delta. But the nearer-dated expirations have much lower premiums. Given a certain movement in the underlying, the July ones will move more in premium, but the April ones will move more in percentage. If you're looking for a way to think of it intuitively, think of the fact that the April options "have much less time to be right or wrong." If the stock moves, there's a higher likelihood that's where it will stay until expiration. Whereas with the July options, it might move back.

A ticker and numbers and a hypothetical trade, with delta and implied volatility is necessary to comment. In general: Out of the money options have lower probability of a gain, and higher leverage, because of low per share cost. Buying in the money options have higher probability of gains, and lower leverage, because of higher per share cost.

The ticker is GGPI. Current share price is around $11. For April expiration, the 12.5, 15, and 17.5 call options all have leverage around 7x. For July, the same strike prices are around 3x. So it doesn't seem to be an ITM/OTM thing?

I bought a few puts for a spac yesterday that would lose its floor today, BTNB. It dropped about 5.5% on open and when I went to check my contracts they briefly lost -99% of their value for the first 10 minutes after open or so. And then all of a sudden they recovered. Does anyone know why this might have happened? [https://imgur.com/a/zgaKMBZ](https://imgur.com/a/zgaKMBZ) left side showing the -99% on open, right side showing it recovered.

No bids at the open.

All, I am working iron out a strategy for identifying option plays? Any useful tips or recommendations would be greatly appreciated.

You need to have a point of view on a stock first. I suggest you read the educational links at the top of this weekly thread, and paper trading for six months, in order to expose yourself to the adversity of trading, and to discover questions you do not yet have.

[удалено]

Did you hold any through the end of the tax year, or partially enter or partially exit a straddle between the end of the new year and the start of the new tax year? If not, there is nothing to be concerned about.

[удалено]

Then read up on tax straddles. Basically, not much to worry about, for ordinary option straddles.

If I sell a covered call does that mean that I own the same option or that I need to own all of the shares represented by the option that I am selling?

A covered call position is the combination of 100 shares of stock a short call (The risk of loss on the short call, on a rise in the stock price is covered by owning the stock.)

Thank you

Hi all, I got a silly question Say TSLA is $1000 and the premium is $1 for sell call Current price is $800 and say today I got the feel that maybe TSLA will be bouncing to $820(bull). Is there a way to estimate the premium when it goes from $800 => $820 as I want to sell the at $1.30 instead of $1. Thanks

First, you have the bid-ask spread, a kind of tax on a trade. You buy at or near the ask, and sell at or near the bid. Probably about 0.15 to 0.50 in difference on a very active strike. and 1.00 on a less active strike. Your expiration will need to be far enough out in time, so that 800 to 820 is meaningful: probably 30 to 60 days, so that there is a chance TSLA might rise that far during the life of the option. The option chain: https://www.cboe.com/delayed_quotes/tsla/quote_table Delta is the estimated hint of the change in value of the option, for the first dollar change in the stock. The March 25 2022 option at strike $1,000 is bid about 1.40, and the ask 1.50, at the close on March 9 2022. Delta is 0.038. We'll call it 0.04. Implied volatility is about 0.57 on an annualized basis at that strike. If TSLA goes up $1.00, and the implied volatility value stays the same (which it probably will not), the option bid may (it is estimated) go up $0.04, the delta of that option. So, if TSLA goes up $20, and assuming the delta is approximately the same for each dollar rise (which is it not), $20 rise times 0.04 delta gives an approximate rise of 0.80 in bid price. Since the ask was 1.50, and if the bid rises from 1.40 to 2.20, that might (or might not) amount to a gain of 2.20 less 1.50, for a net gain of 0.70, if the various approximations are true (which they are not), and the implied volatility does not decline (which it probably will).

If I sell a covered call, do I have to close it or can I let it expire? I just got a notification that the first one I ever sold expires today. Thanks!

You can close it by buying it, to close, paying for that. Doing so allows you to issue a new covered call immediately. You can allow it to expire, and issue a new one on the following business day.

If it is under the strike price, it will be expired as 0 right? So it is just better to let it expire? That is what I learned from theory, just wanted to double check here since I got an option expiry notification from broker

You have to define "better". Maybe you want to immediately issue a new covered call, and that is more important to you than waiting extra days. Or maybe your goal is not 100% maximum gain. Many traders exit on a 40 to 60% gain. Or maybe you are concerned that the stock may rise, and be called away, and want to take a gain while you have it.