Personal Finance & Money Stack Exchange
Personal Finance & Money Stack Exchange

Questions tagged [options]

This tag is to be used for any question on Options, A more specific tag [put-options, call-options, options-assignment, option-exercise] should be used when appropriate.

An option is a contract to buy or sell a specific financial product. This product is known as the option's underlying instrument or underlying interest. For equity options, the underlying instrument is a stock, exchange traded fund (ETF) or similar product. Put options are contracts to sell and Call options are contracts to buy.

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Can someone explain the GME short squeeze situation to a non-stock trader?

GameStop Corp. (GME) stock is over $300 at the time of this post. I understand the 10,000 foot view of the story only: That some Reddit folks are buying up shares to squeeze a short seller. But I don't understand how this works. Why buy shares?…
Paul
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Options for dummies. Can you explain how puts & calls work, simply?

I never understood Puts or Calls. Could anybody explain it like I were a child?
GUI Junkie
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If a startup can always issue new shares, what value is there to stocks/options?

Since in most startups the board can issue more shares at will, what does it mean for an employee to own X% of the shares? When signing up, can an employee protect himself from the company printing more shares after he leaves the company in a few…
ripper234
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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
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Better terms to use to understand Puts and Calls for options trading

I've been trying to learn a little about options trading, specially puts and calls. The term options works well for my brain because someone is buying or selling the option to buy or sell something. So far, so good. But the terms put and call do…
Amazon Dies In Darkness
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My out-of-the-money call options are near expiration and won't sell in the open market. What are my choices?

I had attempted to sell my contracts off today but was unsuccessful. They are currently OTM options and will expire tomorrow. What can I do to minimize loss and why was I unable to sell?
tinthetub
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What typically happens to unvested stock during an acquisition?

I work for a publicly traded company that was acquired by another publicly traded company. I also own shares of "restricted stock units" for my company. All of my shares are scheduled to vest far after the acquisition will be completed. What…
Mike
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Please explain the relationship between dividend amount, stock price, and option value?

I consider myself a reasonably knowledgeable investor, but today was blown away by the fact that I didn't know that a stock's price is decreased by the amount of its dividend. To use a concrete example (these numbers are roughly correct but not…
Jer
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What happens to options if a company is acquired / bought out?

I have some out of the money options with pretty far off expiry dates (Jan 2013, for example). What happens if the underlying company is acquired before then, while I'm still holding the options? Do they instantly expire worthless? What if if the…
Jer
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Why are American-style options worth more than European-style options?

Why are American-style options worth more than European-style options? I realize I can exercise American-style options anytime before the expire, but I can only exercise European-style options during their "exercise period" (usually right when…
user1731
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A beginner question on call option

I made my first options transaction. I believe that a stock that is currently trading around 25, will be in the 40s, come August - based on my research (I know the stock well, and I've invested in stocks for quite some time). So: Current NYSE stock…
blispr
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How can put options be used to buy shares at a lower price?

How to use puts, if you are a net buyer of stocks? I read an article about Warren Buffett buying Burlington Northern stocks and how he used puts to lower the buying price of the shares. Please, explain it to me how can I apply this strategy with my…
gyurisc
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Why do speculators short-sell a stock when they wish to go short, rather than purchase put options?

I'm still trying to figure out, why, if a speculator believes a security will go down in value they use the traditional route of short-selling, when it would seem that purchasing put options is the less risky method. The potential losses for a…
Terry Lennox
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Options revisited: Gold fever

In my recent question, I asked how to operate with options. Now I would like to see whether I learned anything. At this moment, Gold is rising. Fast. As I see it, in the future, the gold price has to come down (just like houses peaked and then…
GUI Junkie
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Is a Low Orbit Gamma Cannon illegal?

The recent/current GameStop situation with r/WSB vs Wall Street reminds me in some ways of the Low Orbit Ion Cannon, a tool in the 2000s that 4chan/Anonymous used to DDoS sites using the home connections of many willing users. While it seems that…
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