Search results

Look at it this way: you're long the synthetic 55-60 put spread, for which you paid 3 bucks. Had you sold the stock at 60, you would have paid a buck for the spread. But you sold it at 58, increasing your cost by $2.00 From that point on, the rules are the same as for any 5-pt put spread...

I emailed IB and asked their policy about this. Here's what they had to say - not very reassuring. "You can hold a short position so long as! IB has the stock to lend to you to short. If not you may be subject to an immediate buy in. IB will try it's best to secure shares to short sell but...

I would mostly agree with that. But with certain options such as those on SPY, there is such a marked and consistent pattern of IV dropping when the underlying goes up that if you're bullish, it's well worth considering selling puts as an alternative to buying the underlying. Of course, that...

Do you get a warning? Or do you just wake up one morning, log on, and get a message "Sorry, your short position in XYZ has been closed out. Have a nice day!"

I seem to recall reading that if you're short stock, you can be forced to buy it back earlier than you wanted to. I'm not talking about being assigned on a short option - just having to give up your short stock position for whatever reason. Is that true? Why would that be?

Lessons learned moving from options on futures to options on stock: A few days ago I noticed that you could do a reversal - a risk-free arbitrage - on USO. You could hit the bid on the ATM puts, hit the bid on the stock, and lift the offer on the calls for a very nice locked-in profit. I...

Have you looked at the skew on MYGN? OTM calls are trading at way higher IVs than ATMs and OTM puts. Very unusual and very interesting. Normally I'd say this indicates excessive bullishness, and that's bearish. Given the scenario though, it may mean heavy insider buying of calls which, of...

Any time you think you can buy a call spread or a put spread for zero, forget about fake money and put in a real order. It won't get filled, but you'll get some risk-free practice. And you'll find out for yourself that the markets are a little more efficient than you think - unfortunately...

I would mortgage my house and buy all of these free diagonal call spreads I could. Then I would sell my firstborn and continue doing more. When that money ran out... I wish you luck jonbig04. But I think you'll find that when you actually try to put this spread on, you'll find it wasn't...

This sounds like a lovely, lovely, Memorial Day dream. It may appear as though you can buy this diagonal spread for zero, but if you try you will no doubt find it was a mirage. To buy a call spread in the same month for zero - that would be more than unlikely. To buy one where the lower...

What data are you looking for? IV on stock options or futures options? Detailed IV strike-by-strike or a general number for comparison's sake? If you post in more detail what you're trying to do, it would be easier to make suggestions.

In the options on futures world this is called a risk reversal. A true reversal would be with the put and call at the same strike. Since they're at different strikes, it is no longer a "lock" - there's risk. Hence the name risk reversal. If you look up "risk reversal" in the index of any...

Mysticman - I come from the futures side, so I'll defer to you on the example using stock and options on stock. In the futures world, there would be no added cost to hedge your deltas with the underlying. To the contrary, you have risk margining, so being delta neutral would actually...

If all your options are in the same month, and there's lots of time remaining, it's easy to stay gamma and delta neutral. With lots of time remaining, you can be long one strike and short a nearby strike, and as the underlying moves from one strike to the other, your gammas don't change much...

One thought would be to keep an eye on the puts. When and if they become NOT inflated, that's the time to buy. That's the best time to buy puts partially because you would not be overpaying. But even more important, the puts deflating would be a sign that bears had capitulated. Once that...

When you are long premium, every time you adjust your deltas you are locking in a profit. When you are short premium (as you are), every time you adjust your deltas your locking in a loss. So I'm not sure what kind of adjustment you have in mind. If you think it likely that the underlying...

I came across a website, www.ivolatility.com They provide options data and an options scanning capability. Has anyone here used them? Any thoughts about the usefulness of this service - good or bad? Any comparisons to other option scanning services, or thoughts about other such services...

As far as VIX options are concerned, the answer to the simple question "where is the underlying trading?" is about as clear as mud. I've read the CBOE's explanation, which only convinces me the confusion is not my imagination. To read the whole thing go to...

With your options calculator, calculate the delta of an otm put with a low IV, then try calculating the delta with higher and higher IV's. You'll see that the delta increases. Since each otm put is trading at a significantly higher iv than the equidistant otm call, it naturally has a higher...

Options on indexes and most individual stocks are such that the lowest strike has the highest IV, and every higher strike trades at a progressively lower IV. There are many theories as to why that is, but they mostly boil down to the fact that more people are long stocks than short, and OTM...