vania-janet/multiturn-rag-retrieval-data huggingface dataset:
the short answer is: No. you do not HAVE to pay $125,000.00 at the end of your first year. that is only the amount IF you decide to exercise.  *fine print: But if you leave or get let go (which happens quite frequently at top tier Silicon Valley firms), you lose anything that you don't exercise. you're basically chained by a pair of golden handcuffs. in other words, you're stuck with the company until a liquidation event such as IPO or secondary market selling (you can expect to spend a few years before getting anything out of your stocks) Now, it's hard to say whether or not to exercise at that time, especially given we don't know the details of the company. you only should exercise if you foresee your quitting, anticipate getting fired, AND you strongly feel that stock price will keep going up. if you're in SF bay, i believe you have 10 years until your options expire (at which point they are gone forever, but that's 10 years and usually companies IPO well within 7 years). i would recommend you get a very good tax advisor (someone that understands AMT and stock options tax loopholes/rules like the back of their hand).  I'm going to take a long shot and assume that you got an amazing offer and that you got a massive amount of ISOs from them. so i'll give this as an advice - first, congrats on owning a lot on paper today if you're still there. you chose to be an early employee at a good tech company. However, you should be more worried about AMT (alternative min tax). you will get enslaved by the IRS if you exercise your shares and can't pay the AMT. suppose, in your fictional scenario, your stock options increase 2x, on paper. you now own $1 Mil in options. but you would be paying $280000 in taxes if you chose to exercise them right now. Now, unless you can sell that IMMEDIATELY on the secondary market, i would highly advise you not to exercise right now. only exercise your ISOs when you can turn around and sell them (either waiting for IPO, or if company offers secondary market approved trading).
"This may sound very ""tongue in cheek"", but the best thing you can invest in is to raise your income in order to increase your retirement savings.  How much are you able to contribute to retirement now?  I think you would be lucky to do $150/month and most months probably less than that.  However, if you were making like 60k/year, and allowed a little lifestyle bloat, you could probably easy put away 20k/year.  Once you are able to do that the savings you can manage now will be quickly eclipsed.   Often times when people consider ""having their money work for them"" they often neglect to factor risk.  Prior to investing one should have a proper emergency fund in place.  That is 6 months or so of living expenses in a nice safe savings account.  Those earn about 1.25% these days, which is pretty meager, but it does earn something.   Once the emergency fund is in place, one can invest with impunity.  Without it, you will have to liquidate investments if economic calamity strikes you.  This could be done at a loss furthering the harm done by the calamity.   Increase your income and create an emergency fund.  Do those things first."
Imagine a stock where the share price equals the earnings per share.  You pay say $100 for a share. In the next year, the company makes $100 per share. They can pay a $100 dividend, so now you have your money back, and you still own the share. Next year, they make $100 per share, pay a $100 dividend, so now you have your money back, plus $100 in your pocket, plus you own the share. Wow. What an incredible investment.
You can earn significantly more than 0.99% in the stock market.  I'd pay the $450/month and invest the rest in a (relatively conservative) stock market fund, making monthly withdrawals for the car note.
"Does this make sense to anyone? It estimated hes made 300 mil in the last fight but lets say its a conservative 100 mil. 4% in the market after inflation is 4mil a year. If it was the 300 mil then it'd be 12 mil hes giving up. Probably more. And that's just the first year, not compounded.       So he expects me to believe that he's making ""smart investments"" in his strip club but not putting the money in the market. This makes zero sense."
FYI: GM has an earnings announcement on April 24th. I think you were trying to create a safe trade by profiting if GM's price fell within a  probable range.  The chart of the Iron Condor captures just about a standard deviation of movement.  So as long as GM is between 31.28 - 37.22 in 34 days you keep the max profit of $110.  Note this trade is a net credit, when placing it you get $110 less fees.  Also by selling the deep in the money call I take it you were trying to make the most of your capital. The chart below shows a standard covered call compared to short put vertical.  Note the short put vertical simulates the covered call position and it is a net credit trade as well.  When you drop the order you get $111 less fees.
I'm sorry but that is just absurd.  900,000 over 20 years is 40909 per yer.  So by this logic, my co-worker, with 4 kids, is making 160k per yer just to cover his children, bullshit. I know his wife doesn't work, she has health problems, and 4 kids.   I have other friends that make way less then 40k per year and yet they have a child, and are able to have a car, this is utter over inflated bullshit, what is middle income then? 150k a year?
People who exclaim ""this stock is going up to $250 easily"" with literally zero quantitative analysis or even a baseline reference point to back it up are prime examples of this. Ignorance of markets and cheap money almost always lead to market runs that end catastrophically. Dot com bubble, 1929 market crash, 2008, it's always the same. People who have no business taking loans out or buying on margin or leveraging positions with debt only to get fucked over once things are brought back down to Earth. After 2 runs of QE, we now have cheap money and with everyone being a crier for their personal investment strategy, we now also have rampant ignorance. I don't expect things to last but no one can call the bottom or the top, or else you'd be very very rich. Have a safe portfolio, don't try to time the markets. Have a strategy that hedges against unexpected change, don't try to gamble on this change. Because it's ultimately impossible to predict the movement of every single person on this earth that invests their money into markets. So don't try. Just be prepared. ---- To expand further into valuation theory: at the end of the day, people invest their money to make more money. It's as simple as that. If your money doesn't grow in an investment vehicle, it's ultimately a shit investment. But no one values intrinsic value of a company's equity before they decide whether or not $380 for TSLA is a good/bad deal. As a result, stocks can be pumped up way higher and people still see the gains on their stocks through capital gains fueled by other optimistic investors. Non-zero sum goes both ways. People can make shitloads of money on stock without an equitable loser--people can also lose shitloads on stock without any real winner emerging from the rubble. When this bubble bursts, lots and lots of people will lose money on TSLA when people's expectations become rational and they stop paying $300 a share for a negative or 70 PE ratio.
would you earn $600 or $1600?  You would have $1600, and your earnings would be $600. That's the only answer it could be, since if you start with $1000 from your savings, then it's impossible for you to have also earned that money in the stock market. When you sell, do you keep your original capital, ($1000)? If you own a car which you bought for $1000, and then sell it for $1600, do you keep the original $1000?
Let's say I have $10,000, and I invest said monies in mutual fund   XXXXX at $100/share, effectively giving me 100 shares. Now, let's   assume at the end of the year I have a 5% return. My $10,000 is now   $10,500. At what point does my investment benefit from compounded interest?   Monthly? Quarter? Yearly? Does it even benefit? Daily would be my answer as your investment, unless you are selling shares or not re-investing distributions is getting the following day's change that impacts the overall return. Consider how if your fund went up 2% one day and then 2% another day from that $10,000 initial investment. The first gain brings it up to $10,200 and then the second makes it $10,402 where the extra $2 is from the compounding. The key though is that these are generally small movements that have to be multiplied together. Note also that if your fund goes up and down, you may end up down overall given how the returns compound. Consider that your $10,000 goes up 10% to $11,000 and then down 10% to result in $9,900 as the return for up x% and down x% is (1+x)(1-x)=1-x^2 which in this case is 1% as 10% of 10% is 1%. The key is how long do you keep all the money in there so that the next day is applied to that amount rather than resetting back to the initial investment.
IMHO your thinking is spot on.  More than likely, you are years away from retirement, like 22 if you retire somewhat early.  Until you get close keep it in aggressive growth.  Contribute as much as you can and you probably end up with 3 million in today's dollars.   Okay so what if you were retiring in a year or two from now, and you have 3M, and have managed your debt well.  You have no loans including no mortgage and an nice emergency fund.  How much would you need to live?  60 or 70K year would provide roughly the equivalent of 100K salary (no social security tax, no commute, and no need to save for retirement) and you would not have a mortgage. So what you decide to do is move 250K and move it to bonds so you have enough to live off of for the next 3.5 years or so.  That is less than 10% of your nest egg.  You have 3.5 years to go through some roller coaster time of the market and you can always cherry pick when to replenish the bond fund. Having a 50% allocation for bonds is not very wise.  The 80% probably good for people who have little or no savings like less than 250k and retired.   I think you are a very bright individual and have some really good money sense.
Well, people have been saying interest rates have to go up for years now and have been wrong so far.  Also there is an opportunity cost in waiting to buy - if another five years passes with nothing happen, you earn 0% on checking accounts, but at least earn 1.65% per year or so on your 10y bond.
Hey now. Don't be so harsh. Depending on when he was hires his $6M in stock may have only dropped to $4.8M today if he was hired very recently or $3.6M if has been on for the last 52 weeks.
An option is freely tradable, and all options (of the same kind) are equal. If your position is 0 and you sell 1 option, your new position in that option is -1. If the counterparty to your trade buys or sells more options to close, open, or even reopen their position afterwards, that doesn't matter to your position at all. Of course there's also the issue with American and European Options. European Options expire at their due date, but American Options expire at their due date or at any time before their due date if the holder decides they expire. With American Options, if a holder of an American Option decides to exercise the option, someone who is short the same option will be assigned as the counterparty (this is usually random). Expiry is after market close, so if one of your short American Options expires early, you will need to reopen the position the next day. Keep in mind dividends for slightly increased complexity. American and European Options do not in any way refer to the continents they are traded on, or to the location of the companies. These terms simply describe the expiry rules.
When a company IPOs the underwriters sell a given percentage on IPO day and shortly thereafter. Whatever is sold on IPO day trades freely.   Insiders, employees and investors who bought before the IPO only sell a percentage of their shares on IPO day. They all also agree to 'lock up' the remainder for a period of time, so that not everyone is rushing to the exits right away. Well, if you're an employee you don't per-se agree, it's just how your stock options are setup and you don't really have a say in the matter.
There is less liquidity because they are less volatile. Option traders aren't exactly risk averse (read: are degenerate gamblers) and the other market participants that use options don't have much use for deep in the money options. Also, just trade more liquid assets and equities if you want liquid options. At-the-money options, and at-the-money options strategies have hundreds and thousand percent payoffs on relatively mundane price changes in the underlying asset.
You could theoretically use any time period unit, but 1 minute and 30 minute  seem to be the most common and useful.  Especially for active traders.  This also has the added advantage of giving you useful insight into the trade volumes throughout the day; assuming that is also included on the chart.  I think most include that as a bar chart across the bottom. Here is a great example for crude oil on dailyfx:  https://www.dailyfx.com/crude-oil Notice that the chart has time options at the top left which include 1 minute, 30 minutes, 1 hour, and 1 day.
There are several reasons why this may happen and I will update as I get more information from you. Volumes on that stock look low (supposing that they are either in a factor between 1s and 1000s) so it could well be that there was no volume on that day. If no trades occur then open, high and low are meaningless as they are statistics based on trades that occur that day and no trades occur. Remember that there has to be volume to get a price. The stock may have been frozen by either the exchange or the company for the day. This could be for various reasons including to prevent some illegal activity. In that case no trades were made because the market for that stock was closed. Another possibility is that all trades that day were cancelled by the exchange. The exchange may cancel all trades if there is unusual, potentially fraudulent or other illegal activity on the stock. In this case the last price for that day existed but was rolled back by the exchange and never occurred. This is a rare situation. Although I can't find any holidays on that date it is possible that this is how your data provider marks market holidays. It would be valid to ignore the data in that case as being from a non-market day. I cannot tell if this is possible without knowing exchange information. There is a possibility that some data providers don't receive data for a day or that it gets corrupted. It may be worth checking another source to ensure the integrity of the data that you are receiving. Whichever reason is true, the data provider has made the close equal to the previous day's close as no price movements occurred. Strictly the closing price is the price of the last trade made for that day and so should be null (and open, high and low should be null too and not 0 otherwise the price change on day is very large!). Therefore, to keep integrity, you have a few choices:
"Number 2 cannot occur. You can buy the call back and sell the stock, but the broker won't force that #2 choice. To trade options, you must have a margin account. No matter how high the stock goes, once ""in the money"" the option isn't going to rise faster, so your margin % is not an issue.  And your example is a bit troublesome to me. Why would a $120 strike call spike to $22 with only a month left? You've made the full $20 on the stock rise and given up any gain after that. That's all. The call owner may exercise at any time. Edit: @jaydles is right, there are circumstances where an option price can increase faster than the stock price. Options pricing generally follows the Black-Scholes model. Since the OP gave us the current stock price, option strike price, and time to expiration, and we know the risk free rate is <1%, you can use the calculator to change volatility. The number two scenario won't occur, however, because a covered call has no risk to the broker, they won't force you to buy the option back, and the option buyer has no motive to exercise it as the entire option value is time premium."
"If there's one thing the futures markets don't lack, it's leverage. It's more than even most of the most aggressive investors use.  Trading options might make more sense for some investors, but I can't think of how this would be ""a safer way"" compared to owning actual futures contracts, even at relatively high leverage."
You can D/K a trade if it is not confirmed in a timely manner.  Also, UBS chose not to sell on the first day they waited hoping and got burned.  So that first day loss argument doesn't stand here, it can't due to a technical error.  My post states that it had to be  a large holding for some time.
There is a reason why most professional option traders are sellers instead of buyers. Option sellers IMO are analogous to insurance companies that come out ahead in the long run. That is not to say if you are bullish about a stock then you should not buy it. I personally would never buy an option outright and look to reduce my cost basis by selling options around it such as:
This is dependent on the broker according to The Options Industry Council.  Your broker will specify what they would do upon expiry (or hours before last trade) if you did not indicate your preference. Most likely they will conduct a probabilistic simulation to see whether exercising the contracts may result in margin deficit even after selling the delivered shares under extreme circumstances. In most cases, brokers tend to liquidate the option for you (sell to close) before expiry.  I've seen people complain about certain brokers forcing liquidation at terrible bid-ask spreads even though the options are still days to expiry. It is better for you to close the position on your own beforehand. The best brokers would allow margin deficit and let you deposit the required amount of money afterward.  Please consult your broker's materials. If you can't find them, use live chat or email tickets.
Robert is right saying that options' prices are affected by implied volatility but is wrong saying that you have to look at the VIX index. For two reasons:  1) the VIX index is for S&P500 options only. If you are trading other options, it is less useful. 2) if you are trading an option that is not at the money, your implied volatility may be very different (and follow a different dynamics) that the VIX index.  So please look at the right implied volatility.  In terms of strategy, I don't think that not doing anything is a good strategy. I accept any point of view but you should consider that option traders should be able to adjust positions depending on market view.  So you are long 1 call, suppose strike 10. Suppose the underlying price at the time of entry was 10 (so the call was at the money). Now it's 9.  1) you still have a bullish view: buy 1 call strike 9 and sell 2 calls strike 10. This way you have a bull call spread with much higher probability of leading to profit. You are limiting your profit potential but you are also reducing the costs and managing the greeks in a proper way (and in line with your expectations).  2) you become bearish: you can sell 1 call strike 9. This way you end up with a bear call spread. Again, you are limiting your profit potential but you are also reducing the costs and managing the greeks in a proper way (and in line with your expectations). 3) you become neutral: buy 1 call strike 8 and sell 2 calls strike 9. This way you end up with a call butterfly. You are almost delta neutral and you can wait until your view becomes clear enough to become directional. At that point you can modify the butterfly to make it directional.  These are just some opportunities you have. There is no reason for you to wait. Options are eroding contracts and you must be fast and adjust the position before time starts eroding your capital at risk.  It's true that buying a call doesn't make you loose more than the premium you paid, but it's better to reduce this premium further with some adjustment. Isn't it?  Hope that helps. :)
"I'm adding to @Dilip's basic answer, to cover the additional points in your question. I'll assume you are referring to publicly traded stock options, such as those found on the CBOE, and not an option contract entered into privately between two specific counterparties (e.g. as in an employer stock option plan). Since you are not obligated to exercise a call option you purchased on the market, you don't need to maintain funds on account for possible exercising. You could instead let the option expire, or resell the option, neither of which requires funds available for purchase of the underlying shares. However, should you actually choose to exercise the call option (and usually this is done close to expiration, if at all), you will be required to fund your account much like if you bought the underlying shares in the first place. Call your broker to determine the exact rules and timing for when they need the money for a call-option exercise. And to expand on the idea of ""cancelling"" an option you purchased: No, you cannot ""cancel"" an option contract, per se. But, you are permitted to sell the call option to somebody else willing to buy, via the market. When you sell your call option, you'll either make or lose money on the sale – depending on the price of the underlying shares at the time (are they in- or out- of the money?), volatility in the market, and remaining time value. Once you sell, you're back to ""no position"". That's not the same as ""cancelled"", but you are out of the trade, whether at profit or loss. Furthermore, the option writer (i.e. the seller who ""sold to open"" a position, in writing the call in the first place) is also not permitted to cancel the option he wrote. However, the option writer is permitted to close out the original short position by simply buying back a matching call option on the market. Again, this would occur at either profit or loss based on market prices at the time.
It depends on the broker, each one's rules may vary. Your broker should be able to answer this question for how they handle such a situation. The broker I used would execute and immediately sell the stock if the option was 25 cents in the money at expiration. If they simply executed and news broke over the weekend (option expiration is always on Friday), the client could wake up Monday to a bad margin call, or worse.
Absolutely.  There is no requirement that an option be in-the-money for you to close out a position.   Remember that there are alwayes two sides to a trade - a buyer and a seller.  When you bought your option, it's entirely possible that someone else was closing out their long position by selling it to you.
Traditionally options expired on the 3rd Wednesday of the months of Mar, Jun, Sep, Dec as this day was never a holiday. See IMM dates. However as option use exploded there were monthly and weekly options created on different schedules. The exchange will specify when its options expire in the contract.