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If the stock falls by $1, the volatiliy decreases by 1%, 1 day passes and the value is 2.30 now, then the intial value was around 2.76. 2.30 +0.25 (to account for the price drop) +0.16 (to account for the vol drop) +0.05 (to account for the 1 day decay) =2.76 This is not an exact...

You should really educate yourself quite a bit more before jumping into trading. A market order means buy/sell at any price. A limit order means buy/sell, but only to the specified price. With a market order you are guaranteed to get filled, but you don't know what price you will be...

As volatility decreases so does theta.

Only indexes have European options (European-style that is).

If the short put is exercised early then you would need to meet the margin requirement on holding the long stock, assuming you would actually want to continue to hold it. If you close out your position right after the exercise then you don't really need the full amount. That is, you get assigned...

Based on the information you have provided I'd say the best strategy is to just go long the underlying. In other words, you haven't provided enough information to provide you with a range of possible option strategies. When trading options you need 4 things to determine the most appropriate...

I don't have a fixed rule about holding ICs to expiry or not. Each expiration represents a unique situation. However, generally, I prefer to close out a few days prior to expiration (i.e. assuming I haven't closed out prior to expiration week) and move on to the next month.

The fact that you post such a question here means that you should NOT do it!

One of the most important, if not the most important, difference! I had the "pleasure" of experiencing the credit risk first hand, when AIG got in trouble and some of the ETNs that were linked to them got hammered.

No, SPY is not cash-settled, it has physical-settlement. You don't know for sure that you would be able to get out at "decent" prices, but if you are not greedy then you should be able to get a reasonable price. The question is not why SPX is gonna switch from open outcry, but what took...

And bigger size means you save on commissions.

As others have pointed out already, the quoted markets are wide, but you can get much better prices. Also, when you compare SPX to SPY you need to take into account that SPX is 10x the size of SPY so 4.00 in SPX is 0.4 in SPY.

Changes in implied vol only affect market to market value prior to expiration. At expiration there is no time value left in an option, so implied vol is irrelevant.

The have the underlying exposure.

I believe the commercials are the funds that hedge the exposure in the underlying shares.

The first question you should answer is why are you holding that call!? Are you expecting AAPL to move up strongly? If you are then you may want to just sit tight and pay the cost (theta). If you don't expect it to move up strongly then converting into a long call vertical may be a good idea...

Personally, I don't think you can make such a general statement as sometimes the situation warrants the use of short term options. You just have to be aware of the trade off between short term and long term options.

Generally any of the broad-based indices are ok for iron condors. So you can also look at NDX, RUT and others (and their respective ETFs if you want to trade smaller size). Determining which strikes to use is the million dollar question, so to speak. There is no single correct rule for this...

If you are buying a straddle then you can only place it at net debit, as you are paying. If you were selling a straddle then you would enter a net credit. At market is pretty self-explanatory. Even is when you are simultaneously buying and selling options then even means that the...

December is a pure binomial play - either the stock moves by more than what is priced into options and you make money, or the options expire worthless. With January options you have some more leeway/time for the stock to make it's move even if the intial reaction is not strong enough.