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Volatility Skew

Don't know. Ask Optionsxpress. At Optionsxpress you have 4 options when you fill out an order ticket: buy-to-open, buy-to-close, sell-to-open, sell-to-close. So if you have 10 and want to sell 20 then you need two order tickets as if you sell-to-close 20 then the order will be rejected. You...

Cost of carry is strike price*interest rate*days to expiry/360. Mind you that professionals pay much lower rates then retail so using the fed funds rate is a good estimate when calculating the cost of carry. So, for example, say the strike 65 and there are 11 days to expiry. The cost of...

Some brokers have software that automatically "knows" what you are doing based on existing positions, others require you to specify, like OptionsXpress for example. I think the ones that require you to specify have some built-in logic that checks what you specify so as to avoid mistakes.

Well, the clearing house has this info so maybe CBOE has linked up with them. Also, usually brokers require you to specify whether you're opening or closing.

Actually, no, the extrinsic value of a call consists of time value and cost of carry, which includes the dividend, so comparing it to the dividend doesn't make sense. When you evaluate whether to exercise the call early or not the idea is that you assess whether the revenue (dividend) is...

Bitsream, If the option is ATM at expiry then it's worthless.

Of course, you get different risk/reward, cause you got different levels of protection. If the stock is at about 64.73 then in the first case your protection runs from ATM, in the second case your protection runs from 62.5, which is about 2.2 below current price. Synthetic stock is synthetic...

I don't know why exactly you prefer ITM credit spreads when OTM debit spreads are exactly the same with no early exercise risk, but let's put that aside. As others have pointed out, the less time value there is the greater the risk. Time value decreases with the option moving more ITM and...

Yeah, you got it right.

Not sure about Tradeking's rates, but you can find all the info here:Thinkorswim promotions

I doubt anyone can beat Thinkorswim's platform. Btw, I think Thinkorswim still runs that promotion where you can choose their competitor's commission schedule rather than their default.

The first example is equivalent to buying an iron condor so you want the index to be outside the wing strikes. The second example is equivalent to selling an iron condor, so you want the index to be between the body (middle) strikes.

The all-call/put condors are exactly the same as iron condors, i.e. they are synthetic equivalents. Selling an iron condor is the same as selling the body in an all-call/put condor, and buying an iron condor is the same as buying the body in an all-call/put condor.

Richard, You are looking at the wrong symbols. End of the quarter ones are only available on ETFs - SPY, QQQQ and IWM. Indices don't have them.

The cheaper ones (QQQ...) are the regular Sep options, the more expensive and less liquid ones (UQQ...) are the new end of the Quarter options, which expire end of the month rather than on the 3rd Friday. So they got 14 more days to expiry.

I don't trade those, so anyone with more accurate knowledge please feel free to correct me, but given that the underlying for Sep options is the Sep futures contract, which expires on the same day, the options will settle into cash not a futures position.

I agree, a far from perfect trade, but may be worth a try, at least for educational purpose. Personally, I'd just pick direction.:D

That's the usual situation before some significant announcement, like earnings, and there's no easy way to play this. Buying a straddle is essentially betting that the market has underpriced the straddle, i.e. that the realized volatility will be higher than implied and vice versa for...

If you want to hedge now then 2 ES is way too much. At the moment, your delta is about -244, so that's about -24 in ES terms, so you need half a contract right now. Assuming SPY hits 132 today, then you'd be about -326 deltas or -32.6 in ES. So, again you need less than 1 contract to get...