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The amount of the dividend will be debited from your account. When you short shares, you borrow them from someone in order to sell them. That person(s) still wants their dividend though, so you are the one who pays it.

You will be required to pay out the dividend if short as of the ex-div date.

"Everyone Who Started Watching Mad Money in 2005 Now Billionaires" -- The Onion http://www.theonion.com/articles/everyone-who-started-watching-mad-money-in-2005-no,32346/

I will give it a shot. The long stock + long put combination is a synthetic equivalent to a long call. After the stock drops by $2, your synthetic long call is in the red, but that loss is capped at what you paid for the put. By then writing an ATM call, you are reducing your loss or even...

Atticus has posted two very educational journals where he trades butterflies: "atticus' single-name delta book" http://www.elitetrader.com/vb/showthread.php?s=&threadid=253092&perpage=6&pagenumber=1 "atticus' 'ship it' vol trading journal"...

Yes. As a retail investor, you will probably generally do #1 to save on commissions and fees (this avoids the stock commission and potentially an exercise fee depending on your broker), as well as capital required. You will also generally receive more than the intrinsic value of the option by...

If you buy an option for $1, and later sell it for $2, then your profit is $2 minus $1 = $1. In the the example you gave though, the market value of the put would not be $2 but rather would be at least $5 (distance between the strike (50) and the stock price (45) for the in-the-money put). The...

I suggest starting with McMillan's Options as a Strategic Investment. He walks in great detail through everything from "what is an option" to different option "spreads" (combinations of multiple options) to trading strategies. It will give you a solid foundation to build on. From there, I think...

I believe that RUT and NDX are listed on multiple exchanges, whereas the others are exclusive CBOE products.

I'll play. Long NFLX calendar straddle @1.65 mid: -1 NFLX APR4 175 call -1 NFLX APR4 175 put +1 NFLX MAY1 175 call +1 NFLX MAY1 175 put

I am a fairly new trader as well, but for what it's worth I take action when the price reaches the expiration breakeven point. If my opinion on the underlying is unchanged, then I will close the position or roll out the short options. If my opinion on the underlying has changed, then I might...

Congratulations--a fitting note to go out on. Thanks for letting us all follow your trades and learn from you.

Some food for thought...I think a key question to ask yourself is "Would I be comfortable instead selling GOOG puts?" If not, then this strategy may not be for you--long stock with covered calls written against it is synthetically the same as selling puts. The risk is when the stock goes down...

I saw that the Kindle edition of The Option Trader's Hedge Fund: A Business Framework for Trading Equity and Index Options by Chen and Sebastian is currently free on Amazon: http://www.amazon.com/Option-Traders-Hedge-Fund-ebook/dp/B00844NXC6/ I found the second half to be a very helpful...

Cdcaveman, thank you--I wonder if my thinking has been off-base then. My impression was that--all other things being equal--a "low" volatility day was more likely to be followed by a "low" volatility day than by a "high" volatility day. Implied vol contains a huge amount of information about the...

Got it, that makes sense now, thank you.

Thank you, that is very helpful. I am struggling a bit with how to apply these principles to my trade selection but will keep studying, trading, and trying to learn from your examples. One follow-up question: when you state that you "use RV/IV modeling for target selection (exits)," do you mean...

Atticus, I followed you into this trade as it looked good to me, but if you or others would be willing I would like to bounce my logic off you to see if I am thinking about this correctly, in terms of how you identify opportunities for the flies. I saw: - GOOG had fallen quite a bit the last...

+1...I use FIOS and have been very happy with it. The internet is fast and extremely reliable. I have had it for 9 months and as far as I am aware it has only gone down once. I called them, they did a reset, and it was back online 15 minutes later. I use ToS and their servers have gone down...

I signed up for the LiveVol blog trial (http://www.livevolpro.com/help/free_trial.html) in December, got it free for two weeks, then they gave me an offer for six months at $100 per month. Not sure if the promotion is still ongoing but perhaps worth a shot.