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A little formula I use for picking bull call spreads. 1. have a price and time target, e.g. 'x' will get to $42 by jan 07 2. have software scan all the spreads of stock 'x' that expire in feb 07 (one month after time target so minimise time decay because you'll exit the position at the latest...

Hi As a general rule, US stocks tend to be 'american exercise' type as do Australian ones. US stock Indices tend to be european exercise type except for OEX which is american exercise. That's about all the generalisation I can make. Profitaker sums it up - check specs on cboe or exchange...

No. You are assigned on the short call, meaning you have to deliver stock to the call owner at that strike. You then exercise your long call, meaning you buy stock from the call seller at that strike. So, you owe stock and you buy stock, the two thus net off to zero. All you end up paying is...

I just had a quick look at goog 'av iv over 90 days' and it looks as if it's in the lowest part of its 2 year range (high 63%, low 31%, current 34%). So, a calendar might be the way to go for a simple hedge if you think goog is going to stay in a range - if you sell the dec 530 call you end up...

Yes. Happened to me on a WBC (ASX) trade a while back. Broker very apologetic but busted the trade anyway - would have been a nice profit. I suspect (but am not certain) that trades only get busted if they're in your favor :). Daddy's boy

I've noticed the same thing with linda's (his/her) posts. Makes one wonder, lol. Also very quick to give an opinion that sounds as if it's come out of a book :). I'm sure I'm gonna cop it sweet now! Daddy's boy

Not here to chew out anyone. Your analysis may be enough for the stock trader but it won't do for the option trader. Iow, you need to know a bit more about options before you start using them. Mojodawg summed it up nicely. Good luck daddy's boy

Are you bullish, bearish or neutral? If neutral you could make a calendar by selling the dec 530 call providing volatility is low. If vol is high make a fly. cheers

I get historical iv from my modelling software - 'optiongear' (www.optiongear.com), which does all markets, or 'platinum' (www.optionetics.com) which covers the US market only. However, they're not free. 'Platinum' costs about $900/yr all inclusive, and OG about $3500 plus an annual data feed...

FMD! Here is my input. Hope it helps. You're bearish on goog and want to do something bearish with options. You think a long put is the way to go. Let's see if you can answer the following questions and we can go from there: What's the iv for the put you're considering? What's the 2 year iv...

Thanks, I'll check it out. Best daddy's boy

These credit spreads aren't for the faint-hearted. In essence one is 'borrowing' the maximum potential profit at the initiation of the trade. Then, if the position unfolds against one (vertical credit spread), this whole 'profit' is returned immediately and then some. I can't remember the number...

If you buy the underlying (u=c-p) then you'd still end up with a naked position, namely a synthetic long call and synthetic short put as well as your original short put. You can hedge with a lower or a higher strike, depending on your view or make a calendar or a fly or whatever you think is...

Not sure if this is going to be of any use to you, but if you want something that gives you target price and a date to go with it, then you could try a piece of software called 'profitsource'. This thing scans the entire market(s) of your choice and throws out all the trades that fit EW...

Not sure if this is going to be of any use to you, but if you want something that gives you target price and a date to go with it, then you could try a piece of software called 'profitsource'. This thing scans the entire market(s) of your choice and throws out all the trades that fit EW...

To leg or not to leg, that is the question :). daddy's boy

Also, if you don't have enough equity to cover the assignment, your broker will automatically exercise your long leg. But as MTE said, you still have to cough up the dividend if there was one (happened to me once, not a nice feeling but taught me to check for dividends on ALL of my equity option...

Yes, you have received a 'credit' on a wasting asset, but you've also been margined on the same 'wasting asset'. So, exactly how is this credit spread different from the equivalent strike debit vertical to make it a "not gambling" proposition? daddy's boy

Hi A number of factors determine the answer to your question. Time decay will be in your favour if your short call is otm, but will work against you if it goes itm. However, I'll confine my reply to your scenario of stock at $48. If you close your position prior to expiry then your profit (if...

Thank you. daddy's boy