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Typically the strike price remains the same, and the options are adjusted to require delivery of the cash. You will have the option to buy $2600 plus 50 shares of NewCo for $9000. They changed the strike price when MSFT issued its special dividend, but that was the exception rather than the rule.

A cash-secured put is a naked put. Cash or margin don't "cover" puts, because they don't limit the loss. The term "secured" only refers to your ability to take assignment without getting a margin call. You can only cover a put by having an offsetting equity or option position in the same...

You could probably easily achieve 15% per annum writing OTM vertical spreads, if you pick stocks whose behaviour you are reasonably confident you can predict. Heck, you could probably invest most of your portfolio in debt to make about 5% and trade spreads conservatively with the margin to make...

That's a highly misleading statistic, and besides it's not even true. http://www.traders.com/Documentation/FEEDbk_docs/Archive/012001/Abstracts_new/McMillan/McMillan.html Most retail traders who make a profit on the long side of options sell them to close, so they don't expire at all. Most...

To make money buying options, you need to be right about three things: 1. Which direction a stock will move 2. How far it will move 3. When it will move The better you are at predicting all three of those things, the better you will do with buying options. If you can only predict one...

If you have options for delivery of 100 GSF, they will become options for delivery of $2600 plus 50 shares of NewCo. Nothing else will change.

I play the stock first and choose my options based on where I think the stock will end up, so as long as the time premium gives me enough wiggle room I'm good to go. I guess that kind of counts as checking IV.

Seems to me that a long put of any duration will cover 100 short shares, and the net amount of maintenance for the position will depend on the strike price and moneyness of the put. Since the calendar should have zero maintenance requirement, you may have issues if your account is close to being...

Because they think they're smarter than the market.

You can also write puts synthetically by writing covered calls, which for most brokers is the first baby level of option permissions. But yeah, IB lets me write naked all the time.

Managing a synthetic isn't really more difficult than managing the true position. You make the same adjustments, and the positions stay equivalent. In your examples: Writing a call to make a collar - You could write the same call against your original long call to get an equivalent vertical...

Yikes. Paying 4% to limit your losses to 5%? That's crazynuts. What is the position you are hedging? A straight long portfolio? Something like a vertical spread or ratio spread instead of plain old shares will give you decent upside returns with limited downside risk. In the end, there is...

Options are derivative securities. You can't trade options well without understanding how the underlying security behaves. If you're going to trade delta-neutral, you quickly get much more complex than stocks, making it even more the right answer to start with stocks. Also, a first foray into...

A call gives you the exact same downside protection. In both cases, the maximum you can lose is the price drop down do your strike, plus the time premium you paid for the option. A call is equivalent to 100 shares plus a put in every possible way.

In general, your strike price selection depends on your outlook for the stock. If you're writing options, the ideal scenario is for the option to expire right at the money. You will get the maximum profit for that trade, and it will be more profitable than options that expire worthless...

The first thing you will learn is that options are derivative securities. That means they each get their value from the value of the underlying stock. If you're going to build an options portfolio, the first thing to do is pick some stocks. And even that is pretty complex. Once you've picked...

That's kind of my point. Delta is all that matters for stocks, because it's how many shares you own. Delta isn't the only aspect of an option position, and nobody was even talking about it until you brought it up. This isn't calculus class, where only "local" effects matter. When you trade...

That makes sense, though. Exchanging a stock for a short put is the same as writing a covered call. If you'd sat on your shares and written the call, you wouldn't have had a tax-deductible loss. That's exactly the kind of chicanery the wash sale rule is designed to prevent.

I wouldn't think so, since September options and October options are different securities. You're not booking a loss on the same investment you continue to hold. Anyway, most of the time it shouldn't matter since you'll be out of both positions in the same tax year. To be certain, I'd...

At least you charge a fair price for it.