r/options • u/Cool_Negotiation_648 • 1d ago
Put gain value even though stock goes up
Yesterday I had bought some MSTR puts near close for $15 per contract when it was around $294 per share. 10 or 20 minutes later, the price per contract was around $20, even though the price per share briefly jumped up to around 298 dollars.
Why would an increase in share price lead to an increase in the value of my puts?
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u/Riptide34 1d ago
The volatility in basically every underlying and asset class skyrocketed on Friday. That much of an increase in IV overcame the change in Delta on your option. If you were long Vega yesterday, you probably didn't hurt as bad or at all. Anyone short Vega (like me), took a bath.
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u/abaggins 1d ago
Newbie here tryna learn. I get volatility in options - but what are vega and delta?
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u/tcopple 1d ago
They’re called “greeks”. They meausre the rate of change of price. They’re partial derivatives of the price, if that means anything to yea.
Vega = the change in value of option for every 1% change in impkied volatility
Delta = the change in value of the option for every 1% change in the spot price.
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u/Riptide34 1d ago edited 1d ago
The other person that replied mostly got it right, with the exception that Delta is the theoretical change in the price of the option for every $1 or 1.00 point (for an index or future) change in the underlying asset's price. Not a 1% move in the stock price.
Lots of good videos on option "Greeks" from TastyLive on YouTube. Check out the Mike and His Whiteboard series for some basics.
If you're "Short Vega" (i.e. you hold negative Vega values in your portfolio), that means you're "Short Volatility". This occurs by being a net seller of options (i.e. you sold puts, strangles, etc.). Anyone who was short volatility/Vega on Friday got a whooping because volatility skyrocketed in almost every underlying. Because of that, option prices everywhere got significantly richer (more expensive), which results in heavy marked-to-market losses if you were short the options. Even call options that were significantly OTM got rich. For instance, I was short a 44 Call in DAL and that option showed a loss or no gain on the day, even though the stock was clobbered.
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u/onlypeterpru 1d ago
Could’ve been IV spike or bid-ask spread tightening. Options pricing isn’t always logical short-term—especially on volatile names like MSTR. The Greeks are playing chess while you’re watching checkers.
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u/iamwhiskerbiscuit 1d ago edited 1d ago
Basically the opposite of IV crush. IV spiked as MSTR was consolidating and then tested the 20 SMA. The market was falling and technicals along with market sentiment suggested a drop was likely to occur.
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u/iron_condor34 1d ago
I'm just guessing bc I don't follow mstr really but a lot of demand/buying for those puts can still increase the price even though the stock goes up. Especially since we're in a pretty stressful time in the markets, you might see things like this occur.
GME is a good example of the opposite, stock down, vol down. So puts didn't do well even though the stock went down. Gotta know that options aren't linear and situations like that can happen.
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u/saxaddictlz 1d ago
Something is weird with the bid ask for MSTR in Robinhood. The bids are higher than asks. Happened to my puts as well starting at 3:35 pm
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u/ideaguyken 1d ago
In addition to IV changes, keep in mind that most platforms show the midpoint between the current bid and ask as the "value" of your option. If the spread is wide — or there's little interest (like zero bids or asks) — that midpoint can shift even if nothing has traded.
To get a better sense of true market value, check the “last trade” in the option’s detail view. Also, if no one is offering to sell close to the bid, the “value” will float up toward the ask until more interest comes in or new limit orders are placed.
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u/Striking-Block5985 1d ago
Implied Volatility increased massively
Its one factor in the Equation which prices options
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u/Infamous_Reality_676 1d ago
It’s amazing how little people know about options
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u/CoreyK124 22h ago
So you just gained all the knowledge at once when you were first learning? Atleast he's trying to figure it out. Some people need to spend the money to learn.
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u/FOMO_ME_TO_LAMBOS 1d ago
Iv%, need to watch it. Not saying you don’t know what you are doing, I’m referring to a lot of traders though. They think it’s as simple as you get your direction and you make money. That’s totally false. In fact, the price of the stock doesn’t matter in a sense when it comes to the value of your options. They are priced by iv, theta, and intrinsic value. You don’t even need the stock price to go your direction, you just need the iv% to go up and be overpowering the theta as it does it, that’s it (intrinsic value doesn’t come in until you are in the money).
Obviously the stock going in your direction helps and you shouldn’t expect your contract values to increase if it goes the opposite, but it is possible due to the way that option value works.
I trade and teach options for a living, and most people that come to me, even the ones that think they have experience have no clue how pricing of an option actually works, which amazes me that that many people have no idea what they are even trading even though they think they do. That’s foundational knowledge that every option trader should know.
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u/Key_Confidence_5414 13h ago
Volatility is up, fear is up, so people are buying put. So although BTC is up, but the put option also increased meaning option is pricing a crash to BTC
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u/AnyPortInAHurricane 1d ago
none of the explains here are right
i assume you are talking about the 4/11 290 PUT , but you failed to say
some clown got ripped off at 28 ? , closed at 15
thats all that happ
vega , shmega
amazing how often the answers here are just plain silly
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u/Unique_Name_2 1d ago
Vol was skyrocketing