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What a load of nonsense. Now I see where you got your name. It should be obvious to you that the raw price per contract is no indication of anything, since a $1 option would be a 50 cent option if the stock split 2:1, yet it would have exactly the same chance of finishing ITM/OTM. Also...

An option is "at the money" when the stock price equals the strike price. When the stock price is above the strike price by a certain amount, the call is in the money by that amount and the put is out of the money by that amount. When the stock price is below the strike price by a certain...

You theoretically could use any of the cash in your account to buy stock. But in reality, the credit you get from writing a put is not even enough to maintain the naked put. You are losing buying power while you gain cash.

Selling puts would increase your cash balance, but it would decrease the amount of capital you have to invest. Remember, you must keep marginable securities in your account to maintain a naked put position, and calls are not marginable securities. It is possible to write a whole bunch of...

On the other hand, if you're not-bearish, naked puts are a better investment. Either way, threat number one is bears.

Long calls and naked puts are the yin and yang of stock ownership. Naked puts profit over a wider range of stock prices, which somewhat makes up for their capped return particularly if you're not the world's best stock picker.

That's how I do it. With an index it should be a relatively simple matter since the strikes are so dense. It's harder with stocks where the strikes are five points apart.

That's why, if you want to be sure to sell an DITM option on the third Friday, you should offer it very slightly below intrinsic value. Any market maker will jump at a free dime, especially in quantity, and you'll have your fill and your profit. If an option is nearer the money, it may still...

I don't think that's exactly what you meant. Options don't give you any "buying power", no matter how much they're worth. What might happen, though, is that the options are DITM enough that they let you buy the shares at such a deep discount the excess value of the shares covers your margin...

Your margin requirements should be somewhat relaxed anyway, shorting against calls. Still, it's far simpler to just sell the options.

Offer the options at 10 cents below intrinsic. Someone will buy them for sure. You won't have to own a single share.

Those would be covered options, then. You can never have more money at risk in your IRA than you have cash in your account. You can't write naked, and you can't write unlimited-loss positions (e.g. naked calls). If you want to write naked, do it in your taxable account.

I guess it's no secret by now that the market can go horribly, horribly wrong in the final hour of trading. Gonna take some people an awful lot of nickels to make back today's losses.

You are absolutely correct in your assessment. There's a reason people close out shorts for a nickel on the third Friday - that's not the time to be opening for a nickel. The problem with strategies that are successful nearly all the time is that people do it a few times for profit and delude...

The holder of a call doesn't take into account his purchase price when he exercises to capture the dividend. Whether he paid $1.20, $4.20 or 40 cents for that call, his decision is the same. His only two options are "exercise" or "do not exercise", and one will be more profitable than the...

Considering that they were ITM debit spreads, the long leg was 5+ points ITM. I can imagine that conversation with the broker on Monday morning, and I think I know how that story ends. But yeah, that was with my old broker, and there were about two dozen reasons why I eventually left them (in...

I've exercised options a bunch of times. Back when I used to trade debit spreads, I'd often let both legs get assigned if the spread was ITM. These days, I trade credit spreads. Still, I'll occasionally close out most of the position and take assignment on one or two contracts if I want the...

The call doesn't entitle you to $2600. Owning 100 shares of GSF entitles you to $2600. Owning the call entitles you to buy $2600 (plus some other stuff) for $9000, if and when you want. Happy trading.

There's no hard and fast rule. As you go farther OTM, the graph progressively changes from the accelerating-decay one to the decelerating-decay one. How far OTM you have to go will depend on IV. Someone out there might be able to give you a rough idea of the delta of a bottom-graph option...

It is true, if you go far enough OTM. Near the money, there's always a possibility that the stock will move far enough to affect the option. Even on the last day, it's possible for a stock to move a point or two. It's not likely, but you never know so there's still some premium left for theta...