International Securities Exchange, Inc. - FAQs
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Frequently Asked Questions (FAQs)
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FAQs CATEGORIES
General Information
Options Basics
Options Exercise
Strategies
Option Price Behavior
Expiration
Trade Entry & Execution
Options Assignment
LEAPS�
Splits, Mergers, Spinoffs & Bankruptcies
Technical Information
GENERAL INFORMATION
Can options be traded on any listed stock?
Is increased open interest bullish?
On a recent trading day, the volume of options traded on a specific contract was about 3,000, yet the next day open interest had only increased by approximately 1,800. How can that be?
What does liquidity mean?
How do I select the proper strike price when I purchase an option?
Is there a free source for historical option prices?
OPTIONS BASICS
What is a stock option?
What is a call?
What is a put?
What do the terms American-style and European-style mean when referring to options?
How do read options quotes?
How do LEAPS� differ from conventional options?
How do I find a broker?
What is an Exchange?
What is the Options Disclosure Document?
OPTIONS EXERCISE
Can I exercise my right to buy the stock at any time up to the expiration date?
What is the difference between American-style exercise and European-style exercise?
Are all index options European style exercise?
If I exercise an in-the-money call option, how soon can I sell the stock?
If my option closes .05 in-the-money on expiration Friday, what is my likelihood of being assigned?
STRATEGIES
What is the risk in selling a covered call at a strike price considerably higher than the stock?
I sold and bought the same call. Is my naked call now covered?
Can I "roll over" options for an additional period of time?
I would like to obtain information about a trading strategy that involves: buying an American put option and selling simultaneously the same American put option. Is this trading strategy feasible?
Can I perform a spread by purchasing an at the money LEAPS call , and selling a front month out of the money call?
I understand that there are discrepancies in options pricing between puts and calls and among the different expirations...For how long do these discrepancies exist, and where can I learn more about them?
What is the difference between a Call and a Put - and why does my broker tell me that I can't sell a Put when I'm long the stock?
OPTION PRICE BEHAVIOR
Why didn't my option move as much as the underlying stock?
When an underling security (e.g. QQQ) is up (e.g. +1.36), why do some call options actually fall in value for the day?
I'm curious why when interest rates rise, option prices also rise? This seems odd since stock prices drop in this situation.
EXPIRATION
What does the term "triple witching hour" mean?
Why do options expire on the third Friday of the month?
TRADE ENTRY & EXECUTION
I want to set a stop-loss order on my option position.
Is it true that when executing buy-write orders, both are executed at the ASK price?
OPTIONS ASSIGNMENT
How can I tell when I will be assigned?
How could I be assigned if my covered calls are in-the-money?
If I am short a call option and I buy back my short call, can I be assigned?
I sold short 10 options contracts recently. Unfortunately, I was assigned early on each contract, one at a time. Couldn't all the contracts have been assigned at once?
What time each day does the Clearing Firm receive information regarding assignments etc... from OCC?
I recently wrote a call option. At the market close of expiration Friday, the stock was .41 cents in-the-money. I know that calls are automatically assigned when they are at least .75 cents in the money, here they were below the .75 cents; So is there is a way that I can avoid being assigned?
LEAPS�
What are cycles and how are they affected when LEAPS are listed?
Where can I find information on LEAPS options and various strategies based on LEAPS?
I recently attended a seminar where the instructor said that some brokers recognize LEAPS securities as stocks and will allow writing of covered calls against LEAPS, even in retirement accounts. I have searched since this time and have not found a broker that will allow this strategy in a retirement account. Do you have a suggestion?
SPLITS, MERGERS, SPINOFFS & BANKRUPTCIES
What happens if I am short calls in the stock of a company which is subsequently taken over before the expiration date?
What happens with my options contracts when a company is delisted from an options exchange?
How can I tell if an option contract has been adjusted?
XYZ Inc.'s stock was recently trading at .60 cents before undergoing a 1 for 10 reverse stock split and is now trading at $6.00. Is my call option with a strike of $5 that was outstanding at the time of the reverse split now in-the-money by $1.00?
TECHNICAL INFORMATION
How do you measure volatility?
Can you explain what the term "Zeta" means?
What is happening when an option's premium seems to disappear?
What is a put/call ratio and how is it used?
Can you please help me understand what is the meaning of "skew" in options?
Where can I find option delta values on the internet?
Is there an easy way to determine the first three characters of an options contract? I see that there can be multiple symbols for options on the same underlying stock.
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