Options - questions and answers - Page 4

Is there something specific you are having troubles grasping? If it wasn't hard (or at least the learning curve being steep), everyone would be doing it.

What are the best online option brokers right now? (commission, tools, research..)

I don't really do much options specific research, but Thinkorswim seems to have all the tools you need. You'll have to tell them to match tradeking commissions, which is $4.95 + .65 per contract. I also like interactive brokers for their .70 per contract flat fee. Td Izone is decent also, 5$ + .75 per contract I love their layout, but not many tools. Zecco is $4.50 + .50 per contract and its decent. Choicetrade is .99 per contract, 8.95 minimum, not bad either. These are the cheapest I've found that have a reasonably good reputation

Will ThinkorSwim match Zecco? Seems like a better deal if they would.

No they won't match zecco, out of the list they said only Tradeking, pretty sure its the best deal they'll match

If you have an option (put or call) that has gone up a lot but the volume has dried up lets say its 0. You wouldn't be able to sell it then would you just exercise it to get your profit out or are you screwed if volume is 0?

Just like in stocks there are market makers, there will always be a bid for your option if it is in the money. The spread might be bigger, therefor you'd get maybe a few % less by selling your options compared to exercising it.

OK but if the volume is 0 who is going to buy it? In that circumstance you could only exercise it if it is in the money right. If it still had positive value with no volume but was not quite in the money then you would be screwed right?

It is my understanding that you can exercise it whenever, as long as it isn't expired, whether it is in the money or not, however, exercising to buy stock at a higher price than it currently is trading at is pretty pointless. Someone is more than welcome to correct me if I am wrong, but that was always my understanding.

It's pretty pointless to exercise a call option that is higher than the price it is currently trading because you would be buying the stock at a price higher than the market price. On the other hand, it's pretty pointless to exercise a put option that is lower than the price it is currently trading because you would be selling the stock at a price lower than the market price. Yes, I believe that you can exercise an option whenever you want as long as it isn't expired. (I think European options don't follow this rule. I think they can only be exercised on the expiration date.) However, if the option is not in the money, you should just let it expire rather than lose even more money.

IMO, excersising an option before expiration is not a good idea ... lets say u excersise it now and next week the stock tanks ... you just lost money on the stock as where if u still had the option you could have sold it on the way down. If the stock runs then your option will more than likely get you more profit than having the stock. Dont take on the risk of owning the stock until the very last minute.

If its in the money, then i don think the bid will ever be zero.

Say you had Rohm and Haas calls and the buyout is at 78$ and the current pps is 75$. Expiration is today, then it is a good decision to exercise if you have the money right? Maybe your broker would even lend you the money for some interest since they know about the buyout and the equity you have?

If I were to exercise an option to buy shares and then sell them on the market the same day, does that count as a daytrade?

You should almost always be able to sell in-the-money options to your broker to exercise. At least that was my understanding.

Does it make sense to trade options for very small profit percentages? For instance, WM has been channeling for the last hour, if you were to buy puts on each rip and sell them on the dip you could probably have scrapped off 20% by now.

I try to take 20% gains anytime I can, usually it doens't take more than a 2% swing in the stock if you're trading close to the money.