Questions tagged [option-strategies]
184 questions
26
votes
2 answers
How do I bet that a stock price will not move?
If I believe a stock will go up, I buy the stock. If I believe a stock will go down, I short the stock. If I believe a stock will neither go up nor down, what do I do? How do I profit from a non-movement in stock price?
I think I might be able to…
user102086
- 1,252
- 10
- 19
13
votes
1 answer
Closing Shorted Positions via Short Ladder Attacks
From my understanding in a short ladder attack investors bid lower and lower prices to drive down the stock value. I assume in many cases this will scare retail investors into selling further compounding the downward price.
Specifically, in the case…
EpicFoodCartDestroyer
- 131
- 1
- 1
- 3
7
votes
8 answers
Why would someone want to sell call options?
I'm having trouble understanding why someone would want to sell call options. For example, if the writer of a call option owned the shares and they expected the share price to fall, why wouldn't they just sell their shares instead of selling call…
Alain
- 189
- 1
- 1
- 5
7
votes
3 answers
Fund or ETF that simulates the investment goals of an options "straddle" strategy?
With all the market volatility of late, I was thinking that it might be a good short term strategy to employ a straddle approach.
For those not familiar with Options trading: This is a strategy where you buy both a call and put option on a stock…
JohnFx
- 53,876
- 13
- 137
- 250
6
votes
1 answer
Options: Letting it expire or sell when profiting?
Do you let your options expire or would you sell it before you let it expire if you're profiting (meaning you're in the green - market is going towards the correct direction you anticipated).
If you let it expire is it worthless? I'm still confused…
hellomello
- 333
- 4
- 8
6
votes
3 answers
How do I replicate a shorted stock and protective call option using options only?
Suppose a stock is currently at $100. I construct the following portfolio:
Short-sell 100 shares at $100
Long a call option — strike price: $105 (protective call)
The protective call option serves to cap the short's potential losses at $500.
How…
Flux
- 17,301
- 12
- 74
- 138
6
votes
2 answers
Strategies to recover from a bad short-term call options purchase where the underlying dropped instead?
If I bought some short-term call options on an expectation that the underlying stock would go up, but instead the underlying stock declined some, shortly after my options purchase, what choices are available to me?
Should I just "chalk it up as a…
Ray K
- 1,355
- 2
- 17
- 27
6
votes
1 answer
Can closing a covered call and opening a new covered call trigger a wash sale?
In Jan 2019, I bought 200 QQQ (ETF) at about $160 and also wrote two covered calls for June 2019 at 170 (higher than the last day price) netting a small premium. Now QQQ is at about 185 so it will be assigned to me unless I cover it.
I am thinking…
riya
- 1,247
- 2
- 10
- 17
5
votes
4 answers
Why this strategy with options and zero risk is not possible?
I'm learning options and I've seen strategies with graphs like these:
Why is not possible to combine a Butterfly with Straddle to get something like this (green is final result):
I'm very new in options so sorry if I'm asking something…
Enrique
- 593
- 1
- 5
- 15
5
votes
1 answer
How do straddles that involve selling options protect against early assignment?
When doing a covered straddle in options trading, it involves selling put and call options when entering the straddle. But there is no way of guaranteeing that your options won't be assigned before you reach your target prices. So is that just…
Matt Phillips
- 420
- 3
- 14
5
votes
2 answers
When does selling (writing) options count for tax purposes?
Let's say I sell an option (say a naked put) that expires in January. If I wait until January to let it expire, does that mean the profits will count towards next year's taxes? Or since I actually sell the option this year, does it go against this…
Falmarri
- 223
- 1
- 3
5
votes
1 answer
How can I bet against a particular stock in relation to the market?
I’ve heard people doing spread trades when they think one stock will do better/worse in comparison to another stock or index. I’m looking for details on exactly how this is done.
Is there a particular trading mechanism that would allow for:
Make…
philfreo
- 151
- 4
4
votes
3 answers
What would the broker do about this naked call option?
Let's say there is a stock of ABC currently at $8, and I sell a (naked) call option on it, with a strike price of $10 and expiration in two months. Suppose my broker lets me do this if I have 50% of the stock value in my margin account - in this…
TradingRookie
- 41
- 1
- 2
4
votes
1 answer
How is Butterfly Trade Strategy good if the mid Strike price is already past?
In the trade example below - you have two buy put and two sell puts. One buy put is on 490 and the other is at 430, but also I am selling two puts at 460.
Since the price range of AAPL already is on 545, why will someone make the trade…
Geo
- 5,845
- 6
- 29
- 39
4
votes
4 answers
What fundamental value do Options give the economy?
I had been wondering lately what the economic value that financial Options (Calls, Puts, American, Bermudan, etc) give to the economy is. In essence, what good do they give us, vs. simply trading the underlying stock (or any other asset)?
A…
Coolio2654
- 215
- 1
- 6