Optos Share Discussion Threads

[praipus] 05/3/2016 17:43

Cash settled means either:

a)just that you can buy/sell options for cash. In reality you need an option broking account of some sort.
b) they may be refering to an Index settle for cash on expiry or exercise rather than an underlying stock.

A premium is paid when you buy the option. There were (I have just read)brokers who only required option premium at expiry but I think that was a long time ago.

Conflation of terms here:"The US options apparently can be settled at any time, but do they get cash settled at expiry too?"

US style option can be "exercised" at any time. Meaning if you are long:

* PUTS you can "put your stock" (sell it) on to the option seller at the exercise price any time in the options life.

* CALLS you can "call for" (buy stock) at the option's exercise price at any time in the options life.

"if I bought an option (European or US) that was in-the-money on expiration date, would it be cash settled automatically?"

Yes.

I think I've answered your questions but feel free to ask away if not.

[chinahere] 05/3/2016 14:10

The European options from ICE.com say 'Cash settled, European style option on the FTSE 100 Index'

Does that mean that they are cash settled on expiry rather than obliging you to go through the buy/sell motion?

The US options apparently can be settled at any time, but do they get cash settled at expiry too?

I guess what I am saying is that if I bought an option (European or US) that was in-the-money on expiration date, would it be cash settled automatically?

[chinahere] 05/3/2016 13:51

Thanks for the input guys. Yes MFglobal and the Swiss currency are the two I thought of recently.

I've started reading but don't fancy signing up for a trading account yet. Is there a good site (UK biased?) to see what is available?

I've read that there needs to be enough open-interest in an option for you to be confident that others will value it properly. 40+ times your stakeholding I read somewhere. Do people agree with this?

[stavros28] 03/3/2016 09:31

Lots of opportunity to scalp this market , two way action.

[alphorn] 29/2/2016 14:02

A lot of people don't like the transparency ;)

[chinahere] 29/2/2016 13:19

I want Brexit too (mostly because I think we should have 100% sovereignty back).

I think the GBP/EUR trade will be very interesting. I personally think a Brexit vote will initially shake the pound but may soon after shake the Euro more.

There are a lot of people in mainland Europe who don't want the EU and/or the Euro and a Brexit may stimulate more referenda.

[stavros28] 29/2/2016 10:01

Feeling on the ground the Brexit vote is boiling down to a yes or no on immigration.
For me its a NO!
We can`t afford to invite every one to the wedding !

Stavros..............

[stavros28] 26/2/2016 17:14

Hello Chinahere , yes MF Global was a pain in the butt took me two years to get the money back.
On the positive side I moved to Interactive Brokers and have never looked back.


stavros

[stavros28] 26/2/2016 16:41

Alphorn , thanks have taken some good profit from selling puts but still holding a large position @ 1.70 starting to sell some calls against that also rolling up and out with the puts after the Bank loan news. Some Brokers now have a buy note on Glen.

[alphorn] 26/2/2016 11:35

Yes, FXCM had a very shaky moment on the Swissie move.

[thetatrader] 26/2/2016 11:32

Praipus

Yes I'm well thanks, hope you and yours are too.

I try to keep away from Options but keep coming back, more fool me.

I've been doing a fair amount of "Robot" Programming lately, not with Options but Spread Bets.

Racked my brains I can tell you!

Good luck.

TT

[praipus] 25/2/2016 09:30

Chinahere,

This is what I/you/anyone should do:

Find out what your brokers terms are in such a situation.

Trade using two accounts or more.

Keep your own physical record of every trade and account statement, screen shot trades.

When the account size exceeds your brokers client money guaranteed maximum take the excess out of the account.

That said I've never had any serious trouble even when FXCM looked a bit shaky during the Swiss shock. (See post 665). Stavros who posts here was with ManGroup when they were in trouble unexpectedly, I hope he will share his experiences and wisdom with you to.

The drop in share price was the Swiss shock where clients owed FXCM $221m


Theta,
Long time no hear hope you are well.

[thetatrader] 24/2/2016 22:44

chinahere

If you want to own stock but want a discount on today's stock price, you could Sell the Put Option and if Assigned the stock your cost basis is reduced.
Of course you still need the cash to purchase the stock at the Strike price, but while you're waiting to be "Put" the stock you could get a bit of interest. Then if you want to get rid of the stock, you could Sell the Call Option and be "Called" the stock.

You have to be careful, but some institutions do similar, Vodafone used to be good for that.

Note, a Covered Call has the same Risk profile as a Naked Sold Put.
Because of the additional fees involved with a C/Call it's pushed much more by the powers that be!

Good luck, be VERY careful.

TT

[alphorn] 24/2/2016 18:00

A view from Chicago:

"A British exit from the European Union would be so devastating for the pound that 29 out of 34 economists in a Bloomberg survey see it sinking to $1.35 or below within a week of a vote to leave -- levels last seen in 1985.

Twenty-three of the economists say sterling wouldn't recover from that rate within three months of the June 23 referendum. Seven see the U.K. currency falling below $1.20 immediately after a "Brexit" vote".

....something to watch very very closely.

[praipus] 24/2/2016 13:18

Chinahere, I've added your books to others listed in post #3.
Alphorn, you are wise and so often right:)

[alphorn] 24/2/2016 11:47

It all depends upon your aim - eg my aim is to write options and take the premium (with all the risks involved).
If you own any shares you can always write a call option against them; which means you take the premium but you may have to let the broker have your shares at the strike price that you wrote. (You know the possible outcomes in advance).

Best is to read a little and ask away. Praipus will know all the answers!

[chinahere] 24/2/2016 11:34

Thanks guys.

I don't want any margin calls and want to be confident that what I buy can go to zero but no more. So does that mean I should stay clear of 'writing' the options but buy 'calls' and 'puts' instead?

I hope they are okay but any suggestions gratefully received. So far I bought:
hxxp://www.amazon.co.uk/dp/1505641446/
and a related derivatives book:
hxxp://www.amazon.co.uk/dp/047009382X

[praipus] 24/2/2016 10:23

Hi chinahere,

If you are buying options your loss is limited to the premium you pay.

Which books have you bought?

[alphorn] 24/2/2016 10:13

Welcome. Yes, if you are writing the options; you can get a margin call.

[chinahere] 24/2/2016 10:07

Well I'm new to options trading but have ordered a couple of books for starters. I have dabbled with warrants in the past and spreadbetting.

I think the main thing I want to know first is if options trading losses can exceed deposits? I know they can in spreadbetting and I really don't like that.

[alphorn] 22/2/2016 16:50

Stavros, you must have done very well on Glencore? Well done.

[alphorn] 14/2/2016 10:30

Morning All,
Have reduced options exposure significantly - it remains an interest to keep the grey cells ticking over rather than the result. Two bad ones I have had have been Aviva and IAG - confident that I shall exit them both at some point. Have very small share holdings, mainly cash but have added BTL in CH.
Am concerned about Brexit.
Take care.

[harvester] 13/2/2016 21:31

Hi All
Staying clear of options at the moment. Although high volatility is good for option writing I am too risk-averse to trade in these extreme market conditions. Instead building long-term portfolio and also swing-trading shares.
Sold Glen few days ago @ 97.9; rebought @ 87; re-sold yesterday @ 98.03 .
Waiting to register with new broker offering ultra-low flat-rate commissions.
Then will be able to do frequent short-term trades for shares like GLEN (no stamp-duty) with trading costs of fractions of a penny .
Will wait for resuming options trading when Market bottom is close.
In my view still some way to go .