r/options • u/PapaCharlie9 Mod🖤Θ • 4d ago
Options Questions Safe Haven periodic megathread | April 2 2025
We call this the weekly Safe Haven thread, but it might stay up for more than a week.
For the options questions you wanted to ask, but were afraid to.
There are no stupid questions. Fire away.
This project succeeds via thoughtful sharing of knowledge.
You, too, are invited to respond to these questions.
This is a weekly rotation with past threads linked below.
BEFORE POSTING, PLEASE REVIEW THE BELOW LIST OF FREQUENT ANSWERS. .
As a general rule: "NEVER" EXERCISE YOUR LONG CALL!
A common beginner's mistake stems from the belief that exercising is the only way to realize a gain on a long call. It is not. Sell to close is the best way to realize a gain, almost always.
Exercising throws away extrinsic value that selling retrieves.
Simply sell your (long) options, to close the position, to harvest value, for a gain or loss.
Your break-even is the cost of your option when you are selling.
If exercising (a call), your breakeven is the strike price plus the debit cost to enter the position.
Further reading:
Monday School: Exercise and Expiration are not what you think they are.
As another general rule, don't hold option trades through expiration.
Expiration introduces complex risks that can catch you by surprise. Here is just one horror story of an expiration surprise that could have been avoided if the trade had been closed before expiration.
Key informational links
• Options FAQ / Wiki: Frequent Answers to Questions
• Options Toolbox Links / Wiki
• Options Glossary
• List of Recommended Options Books
• Introduction to Options (The Options Playbook)
• The complete r/options side-bar informational links (made visible for mobile app users.)
• Characteristics and Risks of Standardized Options (Options Clearing Corporation)
• Binary options and Fraud (Securities Exchange Commission)
.
Getting started in options
• Calls and puts, long and short, an introduction (Redtexture)
• Options Trading Introduction for Beginners (Investing Fuse)
• Options Basics (begals)
• Exercise & Assignment - A Guide (ScottishTrader)
• Why Options Are Rarely Exercised - Chris Butler - Project Option (18 minutes)
• I just made (or lost) $___. Should I close the trade? (Redtexture)
• Disclose option position details, for a useful response
• OptionAlpha Trading and Options Handbook
• Options Trading Concepts -- Mike & His White Board (TastyTrade)(about 120 10-minute episodes)
• Am I a Pattern Day Trader? Know the Day-Trading Margin Requirements (FINRA)
• How To Avoid Becoming a Pattern Day Trader (Founders Guide)
Introductory Trading Commentary
• Monday School Introductory trade planning advice (PapaCharlie9)
Strike Price
• Options Basics: How to Pick the Right Strike Price (Elvis Picardo - Investopedia)
• High Probability Options Trading Defined (Kirk DuPlessis, Option Alpha)
Breakeven
• Your break-even (at expiration) isn't as important as you think it is (PapaCharlie9)
Expiration
• Options Expiration & Assignment (Option Alpha)
• Expiration times and dates (Investopedia)
Greeks
• Options Pricing & The Greeks (Option Alpha) (30 minutes)
• Options Greeks (captut)
Trading and Strategy
• Fishing for a price: price discovery and orders
• Common mistakes and useful advice for new options traders (wiki)
• Common Intra-Day Stock Market Patterns - (Cory Mitchell - The Balance)
• The three best options strategies for earnings reports (Option Alpha)
Managing Trades
• Managing long calls - a summary (Redtexture)
• The diagonal call calendar spread, misnamed as the "poor man's covered call" (Redtexture)
• Selected Option Positions and Trade Management (Wiki)
Why did my options lose value when the stock price moved favorably?
• Options extrinsic and intrinsic value, an introduction (Redtexture)
Trade planning, risk reduction, trade size, probability and luck
• Exit-first trade planning, and a risk-reduction checklist (Redtexture)
• Monday School: A trade plan is more important than you think it is (PapaCharlie9)
• Applying Expected Value Concepts to Option Investing (Option Alpha)
• Risk Management, or How to Not Lose Your House (boii0708) (March 6 2021)
• Trade Checklists and Guides (Option Alpha)
• Planning for trades to fail. (John Carter) (at 90 seconds)
• Poker Wisdom for Option Traders: The Evils of Results-Oriented Thinking (PapaCharlie9)
Minimizing Bid-Ask Spreads (high-volume options are best)
• Price discovery for wide bid-ask spreads (Redtexture)
• List of option activity by underlying (Market Chameleon)
Closing out a trade
• Most options positions are closed before expiration (Options Playbook)
• Risk to reward ratios change: a reason for early exit (Redtexture)
• Guide: When to Exit Various Positions
• Close positions before expiration: TSLA decline after market close (PapaCharlie9) (September 11, 2020)
• 5 Tips For Exiting Trades (OptionStalker)
• Why stop loss option orders are a bad idea
Options exchange operations and processes
• Options Adjustments for Mergers, Stock Splits and Special dividends; Options Expiration creation; Strike Price creation; Trading Halts and Market Closings; Options Listing requirements; Collateral Rules; List of Options Exchanges; Market Makers
• Options that trade until 4:15 PM (US Eastern) / 3:15 PM (US Central) -- (Tastyworks)
Brokers
• USA Options Brokers (wiki)
• An incomplete list of international brokers trading USA (and European) options
Miscellaneous: Volatility, Options Option Chains & Data, Economic Calendars, Futures Options
• Graph of the VIX: S&P 500 volatility index (StockCharts)
• Graph of VX Futures Term Structure (Trading Volatility)
• A selected list of option chain & option data websites
• Options on Futures (CME Group)
• Selected calendars of economic reports and events
Previous weeks' Option Questions Safe Haven threads.
Complete archive: 2018, 2019, 2020, 2021, 2022, 2023, 2024, 2025
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u/BosJC 5h ago
The SPY500 puts I bought a few weeks ago may be ITM at open tomorrow. This is the first options contract I’ve ever owned and I’m trying to think through how to play my holding—sell all, sell half, hold until expiration?
It’s 8 contracts expiring 4/17, bought at $1.63, closed at $15.42 on Friday (current value $12k)
I had 15 contracts but sold 7 on Friday when the VIX spiked above 40, so I’m already well ahead on the trade, but I want to maximize profits.
I also have 17 SPY400 puts expiring 6/20; not sure if that should change my thinking at all.
Appreciate any advice.
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u/Guccimayne 9h ago
Considering today’s high IV, is there a difference between calls on inverse etfs like SQQQ vs puts on QQQ? Is one more profitable than the other?
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u/SamRHughes 5h ago
There's presumably no easy arbitrage. The ETFs are not in a linear relationship with each other, so the contracts won't perfectly replicate each other.
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u/Motor-Effective-626 10h ago
If I buy a put contract for $3 a share but opt to sell the contract for $4 a share before expiration, am I now on the hook for the 100 shares if the person who bought my sold contract exercises the contract? Or am I in the clear and walk away with $100 in my pocket.
Just trying to understand who's on the hook for the shares. Person A: is the originator of the Put contract Person B (me): who spent $300 on their put contract If I execute the option then Person A is on the hook to buy 100 shares at the strike price.
However if I "flip" my contract to a Person C and Person C executes the option then am I on the hook for the 100 shares or did I just transfer ownership of Person A's contract to Person C and Person A is still on the hook for the 100 shares, and I am sort of middle man with minimal risk?
I apologize if the wording is poor, I am attempting to learn all the ins and outs. Thank you for any help you guys can provide!
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u/Arcite1 Mod 9h ago
If I buy a put contract for $3 a share but opt to sell the contract for $4 a share before expiration, am I now on the hook for the 100 shares if the person who bought my sold contract exercises the contract? Or am I in the clear and walk away with $100 in my pocket.
No, you're in the clear.
Just trying to understand who's on the hook for the shares. Person A: is the originator of the Put contract Person B (me): who spent $300 on their put contract If I execute the option then Person A is on the hook to buy 100 shares at the strike price.
However if I "flip" my contract to a Person C and Person C executes the option then am I on the hook for the 100 shares or did I just transfer ownership of Person A's contract to Person C and Person A is still on the hook for the 100 shares, and I am sort of middle man with minimal risk?
The thing is, there really are no persons A, B, and C because there is no "the" contract. It's not like when person A sells to open, a unique contract with serial #A183467B9 is created which person B is then holding, so that when person B sells to person C, they are transferring ownership of contract #A183467B9. For one thing, person C could be buying to close, so what would then become of that contract?
It's really more like each brokerage maintains a big list of all their clients and how many contracts of each option they are long and short. So Schwab has a list saying "Joe Smith is short 3 ABC 4/11 50 strike puts, Frank Jones is long 4 XYZ 4/21 60 strike calls calls," etc. Then the OCC has a master list of each brokerage and how many clients each one has that are long or short each contract. When someone who is long a QRS 4/18 45 strike put exercises, the OCC picks a brokerage at random to assign someone, then that brokerage picks someone at random who is short a 4/18 45 strike put and assigns them.
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u/Motor-Effective-626 9h ago
So they pick someone who already owes them 100 shares of QRS to fill the executed contract?
So in my instance I would be safe to just "flip" the contract since I don't owe shares to anyone and don't have risk of being selected to fill the executed contract? My only risk would be the $300 I paid for the contract and if it never gets ITM?
Thank you for helping!
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u/Arcite1 Mod 8h ago
They pick someone who is short a put. Short a put =/= owing 100 shares.
Short options are "assigned," long ones "exercised." Not "executed."
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u/Motor-Effective-626 2h ago
I would be considered long put then? Since I bought the contract and I have the right to sell the contract or exercise. Short put would be whoever I got the contract from and they have the obligation to buy but receive the premium I paid
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u/Motor-Effective-626 2h ago
Could you explain what short a put means in layman's terms? Short as in shorted a stock, or as in time.
Thank you for the help with my terminology.
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u/Arcite1 Mod 1h ago
Being short something means selling to open a position, selling something you didn't have to start with. When you short stock, you sell stock you don't have. When you short an option, you sell an option you don't have. Being short a security is often represented in a brokerage platform as having a negative quantity of that security.
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u/toluenefan 9h ago
You are correct. If you buy an option, you only ever risk the amount you paid for it. You only have to think about your own net position, not any counterparty. If your net position is 0, you have no rights or obligations with respect to the contract and you walk away with whatever P/L you got on the trade.
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u/Dynasty__93 10h ago
Give me a step by step guide on how to do my first option trade:
Say I believe a stock price will go up from where it is right now. I do not own any of the stock and do not want to buy 100 shares because the stock price is expensive for just 1 share. However I am convinced the stock price will go up and up soon.
Do I buy call options and then select "fill or kill" and then regarding contracts select "1" since 1 contract is 100 shares? However again I do not own the shares as collateral. I just want the right to sell the call option. I think with this option trade if things go south and the strike price is not hit the contract becomes worthless and the premium I paid for the contact is just the money I am out?
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u/toluenefan 8h ago
You’re correct, you could buy a call, and your max risk is the amount you paid for it. Your break even stock price at expiration is the strike price plus the premium you paid. So if the strike is $100 and you paid $1.2 for the call, you’d profit if the underlying was above $101.2 at expiration (but you’d likely want to sell before expiration)
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u/spooopysoup 12h ago
On liberation day, I sold NVDL cash-secured puts at a strike of 31 and expiration 4/25 when the price hovered around $33. It’s currently 87% down. Is it worth it for me to hold this position (I think the put will expire worthless by expiration) while it ties up 75% of my capital and prices drop -> buying opportunities are popping up? I would be fine with assignment, but its unlikely I get assigned so early before my expiration.
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u/SamRHughes 3h ago
You have way too much concentration for the level of certainty you have in your position and the amount of knowledge and work you did to put into it -- especially when short vol.
75% concentration is for long, high-upside, full-conviction positions, but you did it for an upside-capped short vol position where even if you were right you'd get some piddly percentage return.
Yes, you should close that position, and have a portfolio allocation that is more sensible, probably with no options positions, no leveraged ETFs, just 100% treasuries really.
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u/adrian8520 20h ago
Hey y'all.
I'm 30ish yrs old, have been investing since I was 18. Expected a crash and bought puts but most of them expired before the crash so I only barely broke even.
Lets say I can save about enough per month to buy 2 shares of SPY. I want to invest in the market long term and right now is a buying opportunity, but I think there is a high likelihood the market will continue to trade flat or continue plummeting.
Criticize this novice trading strategy for me: I buy OTM SPY yearly calls, that are fairly cheap. This way if theres a correction or rebound I can take some profits. In the meantime, I stop investing and start saving cash. If it continues to tumble or trade flat I can buy in after a while. I feel like this is a comfortable position to be in that is somewhat win/win for me. Or am I missing something obvious..? IV crush etc.
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u/PapaCharlie9 Mod🖤Θ 13h ago
You were right with your first idea, just buy 2 shares of SPY a month. Or even better, split your money between VXUS and SPY (2 to 1 ex-US to US looks like the historically best ratio for equities), but in shares.
Forget options, theta will be lethal for such a long hold.
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u/toluenefan 15h ago
How far OTM are you thinking? You have the right idea about the drawbacks - IV is high and those calls will lose value from both VIX falling and time decay. Their deltas will decrease when VIX falls too. Although, for a year out IV is not nearly so high as near term. The danger is just that it takes a long time for the market to turn around, and by that time your breakeven has moved up significantly due to time decay, further downside, and IV falling.
https://www.optionsprofitcalculator.com/ You can model out what your P/L will look like at different times + spot prices here, and it also lets you adjust IV.
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u/TRIBETWELVE 1d ago
Is it an unwise decision to buy spy puts at a strike price lower than I believe it will go in order to profit from volatility?
Bought 1 contract of SPY 465 exp 4/7 at 84 cents a share at like 3 pm friday in anticipation for orange monday which gained 100% value by the end of the day. I highly doubt it will fall to 465, but I am pretty confident that the volatility early in the day might see its price increase.
Are there any downsides to selling early?
Sorry for the very beginner question. I hate gambling, but when the one guy that has the power to manipulate the global market decides to crash out, I couldn't help but try and take advantage.
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u/PapaCharlie9 Mod🖤Θ 12h ago edited 12h ago
Continuing to hold is a bigger gamble than buying the put in the first place. You doubled your money, any further holding is the pure greed of a gambler.
If you want to stay in and gamble more, close the winner, take a fraction of the profit and buy a new OTM put. That way, if you win, it's pure profit. If you lose all of it, you still have the rest of the profit from the first put you can save in the bank. Best of both worlds.
This is particularly important if the Monday open is a loss for you. Like say you lose down to only an 80% gain. Close it anyway! Then open a cheaper put with part of the profit (like if you gained $400 in profit, spend $200 on the new put), or just stay out of the casino and bank your win and be thankful it wasn't a loss.
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u/toluenefan 21h ago
There’s no downside to selling early, you should sell early because if SPY doesn’t hit 465 the option will go to 0 at the end of the day. Ideally sell before noon.
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u/avocadoroom 1d ago
Hi guys,
Scenario & goal: I want to sell a put contract to profit SOLELY from the premiums, and not have to face assignment from the buyer of my contract once I sell option.
Let's use SPY as an example.
SPY ended yesterday at $505.28
To do this, would I: BUY-TO-OPEN a put contract at $450 strike price
-SPY falls to $460 -put premiums go up -I then look to sell my put contract and profit from the premiums
Then after making money on the premium, and to avoid assignment,
I would SELL-TO-CLOSE my contract?
Thank you in advance
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u/Arcite1 Mod 1d ago
Yes. Although you are never at risk of assignment when you buy a long option. The automatic exercise that occurs if ITM at close of market on expiration is not assignment.
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u/avocadoroom 1d ago
Okay... so if I sell to close and lock in profits from the premium at any point before the expiry date (ITM or OTM) then will I be at risk of assignment still?
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u/toluenefan 21h ago
You will not (and never were). “Assignment” happens when you are SHORT (sell to open) an option. Automatic exercise would happen if your long put expired ITM.
In any case, once you close out you have no rights or obligations with respect to the contract anymore.
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u/dhdhdydhdhdhdbbsbdb 1d ago
I sold 5 160 Coin covered calls last week. Even though coin ended friday at 160.55 my 160 calls were not exersiced and I still have the shares. Any idea why? I would think in the money covered calls would be automatically excersiced when they are in the money.
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u/SamRHughes 1d ago
The deadline for exercise decisions is in after-hours, and COIN went below 160, so somebody elected not to exercise.
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u/cglaser68 1d ago
So I want to understand options better. I understand the basics that if I were to buy a long put to open, I'm purchasing a contract that says I have the right to sell stock XYZ to the contract writer for $X even if the stock is trading for less.
Where I'm getting confused is the risks and best strategy involved if the stock DOES drop in price.
Example: Let's say I buy 10 contracts at $3.00 with a strike of $85 that expires in 60 days. So I pay $3,000 for the contract. Let's say when I buy the contract the stock is trading at $87. I understand that if the stock does not decrease in value the most I'm out is $3,000.
Where I'm getting confused is what is the best thing to do if the price does go down. Let's say 30 days in, the price goes down $10 to $77. My understanding is that I am now in the money by about $5,000. During my research I'm seeing that most advice is you wouldn't excise (Let's say I do not own the underlying stock) but rather I should sell the contract. My largest questions are
!. If I sell the contract (Trade it), does that now mean I would now be responsible for buying the stock at $85 should the person who bought the contracts from me choose to excise it? If so, why would I want to sell it? Would that not be a substantial risk?
Would I instead Sell to Close?
Finally, why would either of these be better than buying the stock at the lower price and then excising the contract?
Thanks.
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u/SamRHughes 1d ago
Options are commingled between net long and net short participants, so there is no specific buyer of "your" contract -- their exercise will get randomly assigned to people with open short positions, and you're out of the picture if you don't have a negative number of contracts.
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u/Arcite1 Mod 1d ago
Where I'm getting confused is what is the best thing to do if the price does go down. Let's say 30 days in, the price goes down $10 to $77. My understanding is that I am now in the money by about $5,000.
Your strike is 85 and the stock is at 77, so your put is in the money by 8.
If I sell the contract (Trade it), does that now mean I would now be responsible for buying the stock at $85 should the person who bought the contracts from me choose to excise it?
The word is "exercise;" "excise" means "to cut out." And the answer is no.
• Calls and puts, long and short, an introduction (Redtexture)
- Would I instead Sell to Close?
Yes.
- Finally, why would either of these be better than buying the stock at the lower price and then excising the contract?
Because Exercising throws away extrinsic value.
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u/cglaser68 1d ago
"Your strike is 85 and the stock is at 77, so your put is in the money by 8."
Yes, but I paid $3000 for the contract, so that's where I was saying $5000. Is 'in the money' just the difference between strike and current stock price without regard to what I paid for the contract? I just want to be sure I understand the definition of these terms correctly, so I can use them correctly.
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u/Arcite1 Mod 1d ago edited 1d ago
Yes, "in the money" doesn't mean "profitable." It means "having intrinsic value." For a put, this means the underlying's current price is less than the strike price.
For example, if you buy an 85 strike put at 3.00, paying $300, and then the afternoon of expiration the stock is at 84, the put will be worth only a little more than 1.00 so you will have lost money, buy 84 < 85, so the put is ITM.
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u/PaulBaller24 1d ago
Anyone running straddles?
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u/PapaCharlie9 Mod🖤Θ 12h ago
Not me. And did you mean long straddles or short? I assume long, since those would benefit more from the current volatility.
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u/ryanzw 2d ago
I closed an SPX call option this morning for a profit and it was reflected in my balance on Robinhood. I checked my account after the close and the realized profits have been removed and it now says it’s pending settlement.
I spoke to Robinhood support and they said they are investigating and will get back to me by Monday. Has anyone else experienced this? Just wondering if this is at all normal, I’m new to SPX trading but I have closed positions before and not had this happen
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u/PapaCharlie9 Mod🖤Θ 1d ago
Uh, can you give us a few more details? There's no way a long call on SPX could be closed for a profit yesterday, with the entire market tanking, so was it a short call? What strike and expiration? What did you open for and what was the closing value?
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u/ryanzw 1d ago
It seems like it’s an error with Robinhood’s system. I bought SPX 0tde 5350 call for 2.20 at 7:52 and was filled to sell at 6 at 8:01. I have proof of this in my trade confirmations as well as the confirmation email Robinhood sends for every order fill.
It seems to be some sort of glitch in their system, i spoke to support yesterday and they are “escalating” it and should have more info for me Monday morning.
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u/Ken385 1d ago
I just looked through time and sales. I see these trading at around 2.20 at 9:52 ct (I assume the time you stated was Pacific time) I then see trades at 10:01 between 2.40 up to 8.20 with a lot of trades in between. They traded at 10.01.38 at 8. I also don't see these listed as cancelled trades in the Time and Sales feeds. So, trades at these prices definitely took place.
When you talk to RH, ask them specifically if the trade actually took place and was busted by the exchange. If so, ask them why. Under certain circumstances the exchange can cancel a trade, but it must go through a set process. Even if the CBOE did cancel your sells, RH would need to let you know this within a reasonable amount of time so you can trade accordingly.
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u/PapaCharlie9 Mod🖤Θ 1d ago
Yeah, that still doesn't make sense. You can provide all the proof in the world, but I don't blame RH for wanting to hold up a minute. SPX declined 322 points on Friday, so it doesn't make sense that a 5350 long call gained $3.80.
Unfortunately, since the contract has expired, I can't look up the Time & Sales on it any longer. Maybe /u/Ken385 has some insight?
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u/ryanzw 1d ago
Around 7:50 my time(10:50 EST) SPX hit a low of 5118.75 and bounced over 100 points in 15 minutes. The 0tde call options absolutely spiked during this time. I was filled into the quick spike.
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u/PapaCharlie9 Mod🖤Θ 1d ago
Well, if it was the bid that bounced up, and it wasn't a reporting glitch from the CBOE, you should be paid what you are owed. But you can see RH's point, right? If it was a reporting glitch in the price quote data stream from the CBOE, which does happen from time to time, they may try to weasel out of paying. Your Terms of Service for the account says they make no warranty for outages or glitches.
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u/ryanzw 1d ago
It’s just crazy to me that I was filled and the money was in my account all day and then removed after markets closed. I guess I’ll wait and see what they say on Monday, definitely done with Robinhood if they don’t correct the issue.
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u/PapaCharlie9 Mod🖤Θ 1d ago
See Ken's reply. You have some support for your position, based on Time & Sales price history. But you are not out of the woods yet.
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u/AffectionateRatio850 2d ago
Noob question I bought 2 Puts that expire 4/7 both are currently out of money but are up over 100% each. There is nothing I can do to sell these over the weekend to lock in my profit before they expire Monday morning?
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u/RubiksPoint 1d ago
Are you sure that they expire in the morning? I only ask because AM expirations are somewhat uncommon.
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u/AffectionateRatio850 1d ago
Sorry they expire end of day Monday. Should I roll these into another date?
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u/PapaCharlie9 Mod🖤Θ 1d ago
You have the whole day to decide. You didn't close on Friday when they were profitable, right? You made the choice to run the risk of weekend volatility and a Monday crash-up (highly unlikely, but for the sake of argument)? So, what exactly is the issue? Regretting your decision to hold through the weekend? Meant to close on Friday but mismanaged your position?
What is the ticker? Is it an extended hour contract or a standard equity contract?
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u/YoshiMcDaddy 2d ago
I sold 4/11 NVDA $100 puts yesterday… I would need the stock to reach $98 next Friday to break even. I’m thinking I will prob have to roll it. When would be the best time to roll it and how far out would you go?
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u/darfraider 2d ago
Wait until there is no extrinsic left then roll to an expiration that has keeps you ATM or OTM for an even trade. That is, you bake your break even lower since you’re down a few strikes. This is assuming you want to defend / eventually take the stock.
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u/NautyNarwhal 2d ago
- [ ] Hello, I have a possibly dumb question that I was hoping someone would be able to help clarify. At around 12:40 PM PST today, 20 minutes before market closes, I bought 14 MSTR 240 Puts, Exp 4/11. They were bought at $3.85 each, for a total of $5400. Since that point, the value of the stock increased, but somehow the value of my puts increased, at one point being valued at $8960. However, the value of the puts at market closed ended at $6020, so it managed to drop about $3000 in a few minutes. Was the massive increase in value on my puts due to an IV spike or something else? Sorry, I’ve just never experienced a stock increasing with my puts also increasing, especially to that extent. Thank you very much!
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u/PapaCharlie9 Mod🖤Θ 1d ago
Thanks for providing full position details, that helps a lot.
It was very likely an illusion. You were probably looking at the mark (the midpoint of the bid/ask spread) instead of the bid. You can't trust a broker's price quote for a position, particularly in a highly volatile situation like the market was in yesterday. Broker's usually use the mark for spot pricing on positions. If the spread was something like $3.75/$6.90, the mark would be $5.33, which would look like your puts had gained 5.33-3.85 = +$1.48/share each. But if you look only at the bid, your contracts lost -$0.10/share.
The bid is a consistent floor under the likely value of your contract. No precise price can be quoted for any contract (or stock for that matter), since price is discovered in equity markets by trading. So when you want to know what your contract is worth, look at the bid (if it is a long position) and interpret the value of your contract as at least worth that much, maybe a little more.
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u/LordFarquuaaad 2d ago
Vix am, 25 contracts Average cost $3. Exp 4/10. I’m in the green but seems to be no liquidity. First time on the vix and Im Not sure where to go. Just dropped down to 1 cent. Am I just cooked?
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u/PapaCharlie9 Mod🖤Θ 1d ago
It would be nice to know the strike price, and whether they are puts or calls, and long or short (though "average cost" implies long). And what does "dropped down to 1 cent" mean? If they are long calls, that seems unlikely, since VIX mooned on Friday. If they were long puts, you made a bad trade.
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u/LordFarquuaaad 1d ago
Strike price is 38, and the current price of the contract says 1 cent however, it is supposed to be somewhere near 8 dollars. Not sure if I’m describing this right.
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u/PapaCharlie9 Mod🖤Θ 1d ago
You still haven't said whether it is a call or a put, and long or short. "The contract" could mean any of those. I'll assume a long call, but you gotta make it clear at some point.
The "current price" of the contract is undefined, because the market is closed right now. So you are probably looking at a stale quote. Since the Friday closing price of VIX was ~$45, you're right, your intrinsic value should be close to 8 as of the close. That could change the next time the market opens, but I wouldn't worry about the "1 cent" quote right now.
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u/LordFarquuaaad 1d ago
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u/PapaCharlie9 Mod🖤Θ 1d ago
Yep, looks like a stale quote. You understand what I mean when I point out that the market is closed right now, right?
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u/LordFarquuaaad 1d ago
Is that when trading for those closes? Sorry, I probably should’ve checked that first
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u/HPHenry21 2d ago edited 1d ago
Holding May 16 525/535 QQQ Bull Call Spread
Long 525C Short 535C
Basis $0.40
What’s the play here? Theta is kicking in
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u/PapaCharlie9 Mod🖤Θ 1d ago
On what? Ticker and spot price of the underlying? How can the cost basis on a $10 wide debit spread only be $0.40?
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u/HPHenry21 1d ago
QQQ, sorry I just edited the post. Layered in DCA on the way down.
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u/PapaCharlie9 Mod🖤Θ 1d ago
I see, so you meant the adjusted cost basis, after some further trading, is $0.40. That makes more sense.
Theta is the least of your worries. Debit spreads reduce your theta risk by virtue of the short leg. You'd have to go a lot wider than $10 before you have to start worrying about theta. And in any case, the much bigger worry is that QQQ is in a nosedive and you are long QQQ.
Well, you picked the May 16 expiration for a reason. You can either ride it out and hope for a recovery, or, if your original forecast (or adjusted after DCA forecast) is no longer viable, cut your losses now, if you think the risk of losing down to $0 is the most likely outcome if you hold.
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u/HPHenry21 1d ago
It’s gotta climb quite a bit just to break even. Yesterday was trading about $0.1
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u/ChimpGimpy 2d ago
.33¢ expiry 4/17 call option Up 90% today let them ride? Or take my profit and buy some shares? Gme
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u/PapaCharlie9 Mod🖤Θ 1d ago
smh. While the entire world goes down, GME goes up. That stock knows no logic.
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u/mrpuma2u 2d ago
Short Expedia? Easy money right? Nobody wants to visit us anymore.
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u/PapaCharlie9 Mod🖤Θ 2d ago
Do EU, China, Mexico, and Canada tourists use Expedia to book travel to the US? Seems to me you'd want to figure out what the popular platforms are in those countries to trade. You'd also have to figure out if those platforms might compensate by sending people elsewhere. If US travel falls 75% but rises 150% to New Zealand, or whatever, the platforms will do fine.
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u/Whatitsjk1 3d ago
i cant stop thinking googl long calls will be a good buy. i am mostly eyeing 3 to 12 month long calls.
for example, looking at the 20MAR2026 $160 calls;
- Current underlying SP = 151.15
- delta 0.536
- Bid/Ask = 18.40 // 18.55
- 351 days DTE
- IV @ 44.3%
- IV percentile @ 84%
Essentially has a ~~54% of being ITM in 351 days.
breakeven is @ $178.40. and from 151.15 to BE is a 18.03% increase.
however, looking at that last line is whats making it obvious that its not a great buy. the IV percentile is also to high for my liking.
and looking at option profit calculator, it says PoP is 34.9%. so it even looks further like its a bad buy.
so my questions are
what are your guy's thoughts? maybe hold off for now and revisit later?
how is PoP calculated? I cant use any other sources because i need to pay to be able to get PoP from those sites. only optionsprofitcalculator is free and gives PoP for free. the definition of PoP is "Probability of returning at least $0.01 at the time of expiry". but isnt Delta also synonymous to "probability of being ITM at expiry". so based on that, shouldnt PoP = Delta? (atleast at the current time of calculation)
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u/RubiksPoint 2d ago
so based on that, shouldnt PoP = Delta?
PoP is the probability that the intrinsic value of the option by expiration is greater than the cost of the option when you purchased it (in other words, you make a profit by expiration).
The probability that an option is ITM by expiration is different. An example to illustrate this point:
If a stock is trading at $100 and you purchase a $25 strike call for $80, the odds that the stock ends above $25 are very high. But you only profit if the stock ends above $25 + $80 = $105. The odds that the underlying ends above $25 (Probability of ITM - roughly delta) are much higher than the odds that the underlying ends above $105 (PoP).
how is PoP calculated?
I don't know the low-level details of how PoP is calculated. The following is a guess:
The site says they use the 30-day implied volatility. My guess is that they assume the 30-day volatility is correct and they assume that the volatility of the underlying is constant over the entire option's life. They then might use the volatility to determine the probability that the underlying ends above the breakeven price.
I think the PoP can be safely disregarded.
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u/Whatitsjk1 2d ago
PoP is the probability that the intrinsic value of the option by expiration is greater than the cost of the option when you purchased it (in other words, you make a profit by expiration).
The probability that an option is ITM by expiration is different.
ah dude no. you're right.
i just had multiple interpretations on it. but your definition makes more sense.
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u/toluenefan 3d ago
For your second question, delta and probability ITM are close but not exactly equal. When volatility or time to expiration are high, probability ITM will be noticeably lower than delta. In this case time to expiration is high. More info: https://medium.com/@rgaveiga/is-delta-the-same-as-in-the-money-probability-8df723bb4fe4
As for the first question - it would be quite bold to go all in calls at this juncture, I would like to see some broad market confirmation of a recovery, and perhaps a lower VIX. On the plus side, the 150ish level has acted as support before (back in September). But given the current fundamental situation, it might be worthwhile to research a bit - how exposed is Google to tariffs? I would think less so compared to Apple and Amazon, hence the smaller selloff today in Google, but I don't know for sure.
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u/WolfOfAfricaZLD 3d ago
What should I read before reading Trading Volatility by Colin Bennett?
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u/theinkdon 3d ago
Intrinsic: Using LEAPS to Retire Early by Mike Yuen.
Start your options journey by keeping it simple: buy long Calls as stock substitutes to get leverage.
Then sell Covered Calls against them if you want.You don't need "options strategies." You need to think like a longer-term investor and find a good underlying (take a look at GLD), then use options to trade it with leverage.
Good luck.1
u/WolfOfAfricaZLD 2d ago
Thanks
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u/theinkdon 1d ago
You're welcome.
I said that as someone who's tried all the "options strategies" and found that they're just not consistent. Thinking longer-term though, finding good underlying stocks or ETFs, then investing in them with long Calls (for leverage) has been good.
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u/Any-Floor6982 3d ago
Dear all, have a question: if I think, e.g. Tesla will go down 2 % tomorrow, is there a tool to show me those options which will most likely profit the most? Thank you and kind regards
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u/RubiksPoint 3d ago
I'm not aware of any tools that do this for you.
If your thesis is that Tesla will be down exactly 2% by EOD tomorrow, you can figure out what price Tesla would be at if it dropped 2%. For simplicity, let's assume Tesla trades at $100 and -2% is $98.
Then, you'd want to find an option that expires after tomorrow, but as soon as possible (longer dated options have higher premiums and less sensitivity to short-term moves).
Once you've found an expiration date, you'd want to find the strike that would have the highest percent gain based on the current trading price of the option and the expected trading price by tomorrow when Tesla is $98. E.g. if a $99 strike put trades at $0.05 today and expires tomorrow, it would be worth $1 when Tesla is at $98. That would be a gain of $1 / $0.05 - 1 = 1,900%. You'd have to do this calculation over all of the strikes to find the one that would gain the most. Odds are the best option would be a strike or maybe two above your expectations of Tesla's price.
This, ofc, assumes you are 100% certain about your thesis. I do not recommend trading like this (or at all).
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u/Any-Floor6982 3d ago
Thank you a lot. So a tool which would do all those calculation is not known?
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u/PapaCharlie9 Mod🖤Θ 3d ago
Not really. You have to make a few more decisions to narrow down the field before you can start making evaluations like that. Like an expiration date or range of expirations. It also helps to decide between puts and calls.
You also have to decide what "most likely profit" actually means. If contract A has a 99% chance of making $.01 of profit, while contract B has a 1% chance of making a $0.99 profit, the most likely one is the 99% chance one, but is that what you really want?
To say nothing of risk.
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u/Any-Floor6982 3d ago
As direction is down I would say puts. As I think or know it will go down 2 % tomorrow 15:00 I do not necessarily care what exact expiration date or strike it has, I just want a tool to know which option would appreciate the most when tesla is down 2 % from now tomorrow 15:00. Hope this clarifies and thank you 😀
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u/mh211 4d ago
I'm not that interested in trading options myself, but I have a general interest in finance, so I come across people discussing options sometimes, and I'ld like to understand those conversations better. I understand the basic mechanics, but I don't have a great sense for how a trader determines that the market is over- or under-pricing a given option relative to that trader's own assessment of what the underlying security is likely to do in the near future.
I've read some of the articles above, such as "Options Basics: How to Pick the Right Strike Price," which have helped a little. I think what I could use is a series of videos where someone walks through examples of why a given option might be a good bet at $X but overpriced at $Y. Any suggestions?
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u/PapaCharlie9 Mod🖤Θ 3d ago
I don't have a video series to recommend, but I can recommend a series of written tutorials that explains just one way in which over/under pricing can be estimated, as an applied trading strategy.
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u/xXDropSh0tzXx 22m ago
Looking for opinions on managing a short put position during this crash.
Currently short a few TSM put contracts that were left over from a wheel strategy. April 17 '25 expiry @ $192.5. They started higher and after a few rolls the cost basis has decreased by $5.54 - B/E @ $186.96 now if I don't buy to close.
Since this position will be assigned in about 2 weeks, would selling calls against the position (starting April 25 '25 expiry) to eat away at the loss I am about to take make sense or best to buy to close, take my medicine and realize a deep ITM loss now and allocate to a different position?
The the thought was to continue to sell weekly or monthly calls to lower the cost basis further and basically start wheeling the position at strikes below breakeven to at least make a dent in the loss. Rolling down and out right now is pretty much guaranteeing a realized loss at this point unless I push expiry 18 months out or more.