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When I used to actively trade earnings, I did just that when the near week's IV expanded a lot than a later week, preferably the following week. The majority of position stayed within the body and the far week then had salvage value. Where the EA surprise blew through both strikes, the loss...

There are no free lunches with dividends (share price reduction). If you exercise the call in order to be eligible to receive the dividend, you introduce market risk into the equation. If the stocks rallies on the ex-div, you do better than having sold the call prior to that day. If it drops...

Been there, done that but never as bad of a fat finger trade as this one. I vaguely recall that many years ago I set up a price warning with IB's software where it flagged the trade if it was X percent away from current prices (you input X and it saves it). I don't know if it still exists in...

If the option has any time premium remaining, it tends to make more sense to sell the option rather than to exercise (salvages time premium and incurs fewer B/A spreads and commissions) If an option is ITM and the bid is less than parity, it makes sense to exercise and close if the haircut on...

You don't sound too swift either

To repeat much of what Robert Morse said - Retail commissions cost an arm and a leg. - You had to call your broker by phone and you often waited for him to get to you (other calls). - At my broker, quotes were available through an automated phone sysyem where you punched in tedious codes for...

An explanation like that BS is meaningless. The fund's performance will tell you if you're being shown his movements or not.

Are you referred to the option's bid being below parity, as in worth less (two words)?

Choice of expiration depends on if doing long or short Butterflies (rate of time decay). Do 3 legged Butterflies (all puts or all calls) to avoid add'l frictional costs. Put and call Butterflies with same strikes and expiration are synthetically equivalent (similar P&L). Close out point based...

One point equals $100. If the credit is 1.6 points, that's $160. If the risk is 18.4 points per contract, that's $1,840 per contract. Doing 50 contacts is $92,000 of risk

Delta changes primarily due to price change in the underlying. It can also change due to the passage of time as well as change in implied volatility.

As beerntrading stated, "There is so much to that question I'm not sure even where to begin." There are multiple ways to approach this so just some brief mention: 1) Close position, book profit 2) Roll calls up to pull out some gains while still participating in the upside 3) Convert to...

When I read your posts I realize how little I know about options beyond my retail trading. Thanks for your ongoing contributions here.

If you want to see how delta changes over time, use a pricing model and advance it one day at a time, keeping all other variables constant. Time affects IV, delta and price but if you fix delta in the formula, you're monkeying around with the entire premise and then you are calculating how IV...

Can you explain how auto liquidation "created" a 10% loss in your account? What position did you have that was at break even, but when liquidated, incurred a 10% loss due to IB?

I too don't understand how auto liquidate could lead to you losing 10% of your equity in one day, especially with SPY. Perhaps realizing an existing paper loss and paying a wide spread but certainly not creating it.

You do not understand this process at all. Some made up numbers: If you sell an OTM call ($50) and the stock's price is well below that ($40), you will not be assigned on the short call. The call owner is never going to buy the stock from you for $50 (making you short at $50) when he can buy...

Maybe I'm missing something more complicated in the question but it seems to me that there are two simple possibilities. Average the B/A of each adjacent strike and calculate the IV for each of the two options. If the two IV's are the same, the missing 25 delta option is between them with...

LOLOL. Option trading levels are designed to protect the broker, not you. A covered call is Level 1 approval and a naked put is Level 4 approval. And yet, they have the same R/R since they are synthetically equal. Your risk dismissal for covered calls is ridiculous (see 2000 and 2008).

You sell a short call strike in a covered call where it provides you with what you believe to be an acceptable R/R trade off (potential profit versus downside protection). It's not meant to be anywhere other than where you want it to be. And you have it backwards. Covered calls are NOT risk...