query: What are the consequences of not respecting a notice period when leaving a job?

positive: It's provincial jurisdiction, so it can vary by province.  In Manitoba, it's different when an employee quits vs. being terminated: Quiting: Being terminated: Edit:  At least in Manitoba, according to the above link, an employer can't set different notice periods. Effective April 30, 2007, employers   cannot have alternate notice policies.   A notice policy set under the previous   legislation is not valid. The only   exclusion is a unionized workplace,   where a collective agreement has a   probationary period that is one year   or less. Ontario, on the other hand doesn't have anything legislated about resignation notice except under a couple very specific circumstances.  This leaves it open for contracts to put in place their own requirements.  In this case, you can be sued for provable losses (minus the savings from not having to pay you.)

positive: It depends on your employer. They may not care to pursue matters if you don't give enough notice. They might be happy to see you go. Or they might be really sad to see you go, but not feel like they need to punish you. Or they might be really angry to see you go, and decide that they want to punish you to the full extent of the law just out of spite. Essentially, we can't tell you that, because different employers will behave differently. My advice? Be a mensch. Give the old employer as much notice as humanly possible so that they can find, hire, and train your replacement. Leave on as good terms as possible. Don't burn bridges. Chances are your new job can wait for another week or two.

positive: When I was pursuing my Business Degree in Canada we were told the standard notice period is 2 weeks on both sides. This means your employer is required to give you at least two weeks notice and you are required to give it as well. If you violate your notice requirement the employer can sue you for lost revenues and etc. for that time period. The converse side is if your employer failed to provide you with sufficient notice you could sue for lost wages for that time frame as well. I'm sure you can contractually agree to more than the legal minimum of two weeks.

negative: I disagree that this is a bad thing. I just found a new job after a lengthy search. I was, thankfully, employed the whole time, but decided to tell my boss a while back that I was interested in finding something else. I did this for a few reasons.  1. I didn't want to screw them. I like the people at my job, just not the work. Why spring a surprise on them with a two weeks notice when you could make sure everything was ok before you leave?  2. I wanted to help in any transition. I ended up training my replacement and have full confidence that there won't be any downturn in productivity once I leave.  3. It's not a good idea to leave anywhere, even if you hate it, on bad terms. It gives everyone there a bad sense of you and can come back to bite you in the future.

negative: Depends on the job.  At my current job, when I leave work for the day, I'm done.  But I have friends who would likely lose their jobs if they weren't available outside of normal hours.  They prefer having a source of income to not having one, even if it means that reddit user ngroot considers them a doormat.

negative: "So you've already considered relocation. Here are a few additional things to consider with respect to negotiating a signing bonus (if any): Would you be leaving a position where you are eligible for an upcoming bonus, profit-share, or other special incentive payout, such as a stock option or RSU vesting date?  A signing bonus can help offset the opportunity cost of leaving a previous job when an incentive payout date is near. At the new company, would you be required to wait some pre-defined period to be eligible to participate in the pension or retirement savings plan with employer basic or matching contributions? If you were receiving ongoing employer contributions in your previous company's plan and would need to wait, say, six months before participating in the new company's plan, a signing bonus can offset lost employer contributions in the interim. Consider funding your own IRA in that time. Would you be required to give up something else of value to you that your previous employer was providing, such as an expensive laptop, that is not expected to otherwise be replaced by the new company? Whether they offer a signing bonus and how much you can expect to negotiate is based on a lot of factors and you'll need to ""play it by ear.""  Remember what bonus means: ""A payment or gift added to what is usual or expected, in particular."" Remember also that a signing bonus is a one time thing.  In general, it's more important to consider the overall ongoing compensation package – salary and incentive plans, vacation, retirement benefits, health benefits, etc. – and whether those meet your long-term needs."

negative: "Sue the friend. When you win, garnish his wages. It does not have to be by so much that it makes him quit his job, but get 75.00 per pay period to come to you. This may require the use of a private investigator but, if you want to make this ""friend"" face consequences, this is your only option. Otherwise, let it go and keep paying his bill."

negative: That mostly just means inequality is increasing though it's still better than not having a job. The most pertinent thing to notice is that the rich are creating a society which serves them without thinking about the consequences of undervaluing other peoples' potential. The economic inertia is not going towards increasing everyone's full potential as much as it goes towards increasing the luxury of the few.

negative: Express yourself as being disloyal and see what happens next.  I have been loyal to every company I have ever worked for since I started working at fourteen. I am now sixty.  Some things have not worked out for me, but I own a home. I have a good job that I love. I work hard and I earn a good living.  Be disloyal to your company and put *that* on your resume and see what your future holds for you.  All you have to do to be loyal to your company is do your job and not betray them. Some companies I have worked for have, in fact, gone out of business while I was working for them and I lost my last paycheck, but I moved on.  In my opinion if you hire me and you pay me for my work, if I understand my obligations to my employer and my employer understands its obligations to me then I am loyal and if I am not happy two weeks notice is my prerogative if there is some reason I can't negotiate a solution.  I will never betray an employer. If I do not want to work somewhere I will leave.

negative: ">If you leave and pursue IBD, they will respect that and help you whether you stay or not...unless they don't give a shit. You can very easily say ""I don't think this is the best place for me to learn X, I need to go to Y company to achieve this. It took me Z weeks to learn this""   >Of course this doesn't apply if you've known this person for years beforehand, but I'm 95% sure this is what you need to be aware of. Management sucks when you aren't in their ""club,"" (which it sounds like you're not) it's a part of life.   Can you elaborate? I'm not sure I understood all of it. Essentially you're saying she won't help me, period?"

negative: It may depend on the rental agreement you signed, some agreements may include clauses that allow for early termination so check your agreement carefully. Where there is an early termination clause included it will usually have some sort of notice period or financial penalty associated with it.  For example you may have to give a couple of months notice and pay rent up to the end of that period or be able to pay some sort of one-off penalty. As a more practical example I broke a US rental agreement early last Autumn and had two early termination options in my rental agreement: In my case we chose the second option since we were actually moving out of the country and it was easier to have our US finances completely settled. I'm now planning on breaking another agreement because I'm in the process of purchasing a property and the purchase will likely go through before the lease expires.  In this case the early termination clause requires 2 months notice i.e. we will have to give 2 months notice and pay rent for those two months (unless we are less than 2 months from the end of the lease). As @BrenBarn points out you should also check the laws for the jurisdiction your rental agreement is in to understand what your rights and options are if your agreement does not have an early termination clause

negative: This happened to me in the mid 90's. I wanted to withdraw enough cash from my account to buy a new car and they nearly panicked. I took a bank draft instead.  I discovered afterward that they can require up to a week's notice for any withdrawl.

negative: What drives me insane is when UPS leaves a package on my porch without even knocking. Every single time they come, the guy places it on my porch and leaves while I am right inside. Sometimes I won't notice it for 3 hours, while the other day I didn't find it until the next morning.  It would take 3 seconds to knock!

negative: Yes, why suffer any consequences when future people can be made to suffer them? That's what the thinking boils down to. It's the main factor driving the high rents & house prices now, including indirectly via artificial job creation.

negative: "Another aspect is decision makers must CONSTANTLY re-evaluate not only the current climate, but the future.   I'm not sure if anyone noticed but the economy and consumer confidence is in the toilet. If business owners arent careful it very well could collapse and in the end if it does fail there is nobody else responsible but themselves.  So in times of success, yes the business owners reap profit, but in tough times so too do they have to take full responsibility and consequences of reality. Salary employees have no such liability, they go to work at 9am and leave at 5pm and while most want increased responsbility because that usually yields increased competition, most have no interest in taking true responsibility for the company's health.   As the sole principal of the company it is wholly his choice what direction and decisions to make for the company. I guarantee you his decision will not be based on vengence or grudge but rather weighing incentives to continue, and being an older gentlemen decide it's no longer worth it and retire.   I've personally see many smaller companies do this in the past 10 years. ""Why go through the stress? I've got cash. I'm going to sell or close the company and retire."""

negative: Ask for documentation proving the amount they say you were overpaid, and ask for time to review their claim. If it is a large amount that they can prove you owe, and if you were staying, then you could ask for the repayment to be spread over multiple pay checks. This would avoid the situation where you could get a very small check or even a check for zero. Because you are leaving, you could ask for time to reimburse them, but don't count on them agreeing to that deal.  The lesson is to save all time cards, especially ones in which your hours are not consistent. Also save all pay stubs for the year. What you should do now is download all the time card and pay info on the website, before you lose access to it. These should be saved on your home machine, or printed and kept at home. Check to see if they made any time card adjustments. Many systems keep track of all changes made by the employee and by management; both before and after the employee signs the time card. If there are change you should be able to ask them to explain the changes.

negative: I'm saying if she LIKES you (which she most like doesn't) she will help you regardless of whether your leave or stay.  But you should not even view that as an option.  You need to do what's best for YOU.  If you know a better opportunity is around the corner, your boss should respect your decision and you find a neutral way to leave your job.  However, I don't know your situation and it's not great to leave as soon as you got there, it makes you look like you don't know what you're doing or don't know what you want (which is what everybody is doing anyway..)  Don't trust your boss unless you knew her prior to this job for a long time, or through family.  That should not come into play in your decision.  You can network with bankers to get a banking job, do you really need to spend months and months appeasing this one person to get referrals? On the flipside, you definitely want to be in good standing with your boss.   Again, do what's best for you.  Don't take empty promises or you will get burned.

negative: COBRA provides you the option to continue your coverage as you had during your employment, after you leave your job. It is optional, you need to actively elect it. Once you elect, coverage starts from the day your employment coverage ends. So to answer your questions: Yes, it is legal. You elected this yourself, no-one forced you. You cannot get your money back. You did have coverage in June-July-August, since your COBRA election provided coverage from the date you left your job. As to cancellation, from the DOL FAQ: Q12: Can continuation coverage be terminated early for any reason? A group health plan may terminate coverage earlier than the end of the   maximum period for any of the following reasons: If continuation coverage is terminated early, the plan must provide   the qualified beneficiary with an early termination notice. The notice   must be given as soon as practicable after the decision is made, and   it must describe the date coverage will terminate, the reason for   termination, and any rights the qualified beneficiary may have under   the plan or applicable law to elect alternative group or individual   coverage. If you decide to terminate your COBRA coverage early, you generally   won't be able to get a Marketplace plan outside of the open enrollment   period. For more information on alternatives to COBRA coverage, see   question 4 above.

negative: A common response to poor labour conditions is: if you don't like your job, leave and get a better one.   However, in Idaho the state is trying to deregulate aspects of the labour market. It's making it easier for companies to enforce non compete agreements. Meaning you literally cannot leave for a competitor if you don't like your employer.   That's a natural consequence of deregulating labour markets: it lets the companies with enormous budgets push around workers, who are at the same time having their ability to organise into unions and bargain collectively undermined by companies who use said economic power to lobby against regulations that protect workers.   So, free market away but don't convince yourself that a lack of regulation will somehow magically lead to a utopian allocation of resources where everyone gets what they need.   In a totally unregulated market, the wealth only trickles one way and it's not down.

negative: This is a case where you sit down with an advisor or two. There are legal, and tax issues.  When you deposit the cash, or buy a car with it, the large cash transaction will trigger a notice to the US Government. So they will eventually find out.  Before you get to that point you need to know what obligations and consequences you will be facing. Because you don't know if it was a gift, or found money, or if the owner will be back looking for you to return it; therefore you need expert advice.

negative: If you leave without having met all the obligations in the contract they could sue you for the money. The size of the company may mean that they are experienced in collecting their debts. The insurance they made you pay for, may pay them back if they meet all the requirements in the policy. That means that you will have to read the terms of the policy to see if the insurance company will come after you for the losses. It is likely that your skipping out early while owing money will be attached to your credit history without your SSN.

negative: I have never worked at Wal-Mart.  Additionally, the employees under me loved working for me. Nights when I would close, when I came in, workers would ask if I was the only once closing and be very happy when I was. I never received a single complaint and once I left, many of them have since contacted me to hang out in off work hours. I treated them all with respect.  As far as the pay itself, I worked for a major corporation so at the store level, you don't have much say in what was a very structured pay-raise scale.  You can treat people with respect while also demanding that they do a good job. In fact, I think workers don't respect those bosses that allow shitty work. I know I don't.

negative: The equation for the payment is  This board does not support Latex (the number formatting code) so the above is an image, the code is M is the payment calculated, n is the number of months or periods to pay off, and i is the rate per period. You can see that with i appearing 3 times in this equation, it's not possible to isolate to the form i=....  so a calculator will 'guess,' and use, say, 10%. It then raises or lowers the rate until the result is within the calculator's tolerance. I've observed that unlike other calculations, when you hit the button to calculate, a noticeable time lag occurs. I hope I haven't read too much into your question, it seemed to me this was what you asked.

negative: "Let's say - someone who gives you vague direction, gets upset when you ""do it wrong,"" then gives you the impression you're free to do it as you see fit, then two hours later comes in and starts micromanaging. When you ask for clarification by email, it goes unanswered, and when you ask in person you get a sixty minute discussion about some other subject that nets you more work.   Or how about a boss that's passive-aggressive? So when you take two days off to take your kids to college, he comments that there was a meeting that you really should've been at, because you would've been really helpful. And he finds ways to bring this up several times over the next few days.   What about a boss that asks you to take care of the network in addition to your primary duties, then asks you to leave the hours off your time sheet because it affects the customer's billing. Then a year later during promotion reviews, recorded hours are part of the input and said boss just sits there and doesn't say a word as their team is fucked?   Any of those suit you?"

negative: "I just edited an employment agreement last week that had a fairly standard noncompete for the industry (""You won't go to work for my clients"") , but the last sentence was ""You will not work as a contractor or consultant within 150 miles for 18 months.""  WTF. Granting the employer the benefit of the doubt, it was intended to mean ""for any of my clients"" but that's not what it said, and as written it basically meant if I leave this job I can't work for 18 months."

negative: Walmart treated its employees like shit for decades, they are just now starting to treat their employees slightly better because its hurting their business. They will piss on their employees just enough to not leave stains that their average customer will notice, and leave no mind to the lingering smell that the more well off customer might notice, but has no interest in shopping there anyways.

negative: *Paternity* leave. The situation now allows managers to hire a man over a woman because he can't take off when he has a child. Requiring that he be offered the same or similar option reduces or eliminates that incentive for hiring a man instead of a woman.  Another way of looking at it: most people think that the way to promote hiring women is to make them better potential employees, but another way to do it is to make men worse potential employees (by giving them the same time off).

negative: "As Kurt Vonnegut said, the way to make money is to be there when large amounts of money are changing hands and take a little for yourself; they'll never notice. That's what transaction costs are: when a fund buys or sells stocks a bit of the money goes to the folks who handle the transaction. When you personally buy or sell stocks a bit of the money goes to the broker in the form of a fee. (and, no, no fee brokers don't work for free; they just hide the fee by not getting you the best possible price). So frequent transactions (i.e., higher portfolio turnover) mean that those little bits of money are going to the intermediaries more often. That's what ""higher transaction costs"" refers to -- the costs are higher than in a fund that buys and sells less often. In short, those higher transaction costs are a consequence of higher turnover; nothing nefarious there."

negative: I had a situation like that happen at work. A girl in H.R. did that and milked maternity leave until her six months were up. Then called in and said she was resigning. My boss was talking about her to some of the staff saying she'd probably not going to come back and that the H.R. Director should be looking to replace her position. He was right, her husband had a high paying tech job and she didn't need the income so why would she stick around a dysfunctional company?   The other maternity leave was a girl in my department who got pregnant by a dude a few cubicles away. She had to go on disability 3 months before her maternity leave officially kicked in. She had my boss over a barrel and convinced him to pay the difference between disability and her salary for the entire period she was out. It appears she threatened to quit unless she got a raise and another promotion because she came back with a better title and her pay check got larger from then on. She basically held a bunch of incomplete work over his head as ransom for months. As of July when I left she just got around to doing it...so basically it took her a year to complete a project that should have taken about a week or so.

negative: You can still be nice, yet command authority. In fact, being a D-bag boss will often negatively affect the company's culture, which is very important. If you make a brash change people will notice and give you less respect. Just be straight with what needs to get done, and why. But at the same time, don't be afraid to kick ass if it's need.

negative: Extended illness/disability that prevents you from being able to work. Edit: Leigh Riffel: So, why should this be expected, and how should it be planned for? Some of us may be fortunate enough that this never happens, but I've known enough unlucky people to have seen that it can and does happen. Prepare for it with:

negative: COBRA is with regards to any termination, not only if you're laid off. If you leave your job voluntarily you're still eligible for COBRA, at least from my experience in California. Once you start working at the new job that provides health benefits - you're expected to roll-off of COBRA. No. Once you run out of the COBRA period - you're on your own.

negative: I like when I get told about something last minute, scamper like mad to get it done ASAP, and then get yelled at for holding things up.  I threaten to hold them to our review cycle process which calls for 4-7 business days.

negative: Come to Oklahoma they can fire you and not hire you for what reason they please. Call at will state and by the way. I don't know about your state our country but here companies do not have to provide leave due to pregnancy.

negative: "there's people in Balance sheet substantiation that are the last ones to leave, or ""risk"" after dark when the lights turn off at 7 for this bank I intern for.  Luckily for me I have a front office role as an intern"


query: “In-the-Money” vs “Out-of-the-Money” Call Options

positive: "First, welcome to Money.SE.  The selected page is awful. I don't know the value in listing different expirations at the same strike. Usually, all the strikes are grouped by month, so I'd be looking at Jan '15 across all strikes.  ""In the money"" means the price of a stock is trading above the strike price, if a call, or below it, if a put.  On 10/20 of some year, Intel was trading at $23.34. The January $25 call strike was just $0.70, and April's was $1.82. These were out of the money. The $25 puts were ""in the money"" by $1.66 so you could have paid $1.90 for the Jan $25 put, with $.24 of time premium.  By November, the price rose and the put fell, to $.85, all time premium.  As with stocks, the key thing is to only buy calls of stock that are going to go up. If a stock will fall, buy puts. Curious, what was the class discussion just before the teacher gave you this image?"

negative: "A 'Call' gives you the right, but not the obligation, to buy a stock at a particular price. The price, called the ""strike price"" is fixed when you buy the option. Let's run through an example - AAPL trades @ $259. You think it's going up over the next year, and you decide to buy the $280 Jan11 call for $12.  Here are the details of this trade. Your cost is $1200 as options are traded on 100 shares each. You start to have the potential to make money only as Apple rises above $280 and the option trades ""in the money."" It would take a move to $292 for you to break even, but after that, you are making $100 for each dollar it goes higher. At $300, your $1200 would be worth $2000, for example. A 16% move on the stock and a 67% increase on your money. On the other hand, if the stock doesn't rise enough by January 2011, you lose it all.  A couple points here - American options are traded at any time. If the stock goes up next week, your $1200 may be worth $1500 and you can sell. If the option is not ""in the money"" its value is pure time value. There have been claims made that most options expire worthless. This of course is nonsense, you can see there will always be options with a strike below the price of the stock at expiration and those options are ""in the money."" Of course, we don't know what those options were traded at.  On the other end of this trade is the option seller. If he owns Apple, the sale is called a ""covered call"" and he is basically saying he's ok if the stock goes up enough that the buyer will get his shares for that price. For him, he knows that he'll get $292 (the $280, plus the option sale of $12) for a stock that is only $259 today. If the stock stays under $280, he just pocketed $12, 4.6% of the stock value, in just 3 months. This is why call writing can be a decent strategy for some investors. Especially if the market goes down, you can think of it as the investor lowering his cost by that $12. This particular strategy works best in a flat to down market. Of course in a fast rising market, the seller misses out on potentially high gains.  (I'll call it quits here, just to say a Put is the mirror image, you have the right to sell a stock at a given price. It's the difference similar to shorting a stock as opposed to buying it.) If you have a follow up question - happy to help. EDIT - Apple closed on Jan 21, 2011 at $326.72, the $280 call would have been worth $46.72 vs the purchase price of $12. Nearly 4X return (A 289% gain) in just over 4 months for a stock move of 26%. This is the leverage you can have with options. Any stock could just as easily trade flat to down, and the entire option premium, lost."

negative: "Investopedia explains how a stock split impacts the stock's options: Each option contract is typically in control of 100 shares of an underlying security at a predetermined strike price. To find the new coverage of the option, take the split ratio and multiply by the old coverage (normally 100 shares). To find the new strike price, take the old strike price and divide by the split ratio. Say, for example, you own a call for 100 shares of XYZ with a strike price of $75. Now, if XYZ had a stock split of 2 for 1, then the option would now be for 200 shares with a strike price of $37.50. If, on the other hand, the stock split was 3 for 2, then the option would be for 150 shares with a strike price of $50. So, yes, a 2 for 1 stock split would halve the option strike prices.  Also, in case the Investopedia article isn't clear, after a split the options still control 100 shares per contract. Regarding how a dividend affects option prices, I found an article with a good explanation: As mentioned above, dividends payment could reduce the price of a stock due to reduction of the company's assets. It becomes intuitive to know that if a stock is expected to go down, its call options will drop in extrinsic value while its put options will gain in extrinsic value before it happens. Indeed, dividends deflate the extrinsic value of call options and inflate the extrinsic value of put options weeks or even months before an expected dividend payment.  Extrinsic value of Call Options are deflated due to dividends not only because of an expected reduction in the price of the stock but also due to the fact that call options buyers do not get paid the dividends that the stock buyers do. This makes call options of dividend paying stocks less attractive to own than the stocks itself, thereby depressing its extrinsic value. How much the value of call options drop due to dividends is really a function of its moneyness. In the money call options with high delta would be expected to drop the most on ex-date while out of the money call options with lower delta would be least affected. If a stock is expected to drop by a certain amount, that drop would already have been priced into the extrinsic value of its put options way beforehand. This is what happens to put options of dividend paying stocks. This effect is again a function of options moneyness but this time, in the money put options raise in extrinsic value more than out of the money put options. This is because in the money put options with delta of close to -1 would gain almost dollar or dollar on the drop of a stock. As such, in the money put options would rise in extrinsic value almost as much as the dividend rate itself while out of the money put options may not experience any changes since the dividend effect may not be strong enough to bring the stock down to take those out of the money put options in the money. So, no, a dividend of $1 will not necessarily decrease an option's price by $1 on the ex-dividend date.  It depends on whether it's a call or put option, and whether the option is ""in the money"" or ""out of the money"" and by how much."

negative: "Whether or not you make money here depends on whether you are buying or selling the option when you open your position.  You certainly would not make money in the scenario where you are buying options at the open.  If fact you would end up loosing quite a lot of money. You do not specify whether you are buying or selling the options, so let's assume that you are buying both the call and the put.  We'll look a profitable trade at the bottom of my answer. Buying an in-the-money Call option with a strike price of $90 when the underlying asset price is $150 would cost you a small fraction over $6000 = (100 x $60) since the intrinsic value value of the option is $60.  Add to this cost any commission charged by your broker. Buying an out-of-the-money Put option with a strike price of $110 when the underlying asset price is $150 would cost you a ""small"" premium - lets say a premium of something like $0.50.  The option has no intrinsic value, only time value and a volatility value, so the exact cost would depend on the time to expiry and the implied volatility of the underlying asset. Since the strike price is ""well out of the money"", being about 27% below the underlying asset price, the premium would be small.  So, assuming the premium of $0.50, you would pay $50 for the option plus any commission applicable. The cash settlement on expiry, with an underlying settlement price of $100, would be a premium of $10 for each of the two options, so you would receive cash of 100 x ($10 + $10) = $2000, less any commission applicable.  However, you have paid $6000 + $50 to purchase the options, so you realise a net loss of $6050 - $2000 = $4050 plus any commissions applicable. Thus, you would make a profit on the put option, but you would realise a very large loss on the call option. On the other hand, if you open your position by selling the call option and buying the put option, then you would make money. For the sale of the call option you would receive about $6000.  For the purchase of the put option you would pay about $50. On settlement, you would pay $1000 to buy back the call option and you would receive about $1000 when selling the put option. Thus you net profit would be about ($6000 - $1000) for the call position, and ($1000 - $50) for the put position.  The net profit would then total $5950 less an commissions payable."

negative: There are two basic issues here.  First, there is the difference between accounting terms and their dictionary definitions.  Second, once you dig into it there are dichotomies similar to put vs call options, long sales vs short sales, bond yield vs interest rate.  (That is, while they are relatively simple ideas and opposite sides of the same coin, it will probably take some effort to get comfortable with them.) The salient points from the Wikipedia article on debits and credits: In double-entry bookkeeping debit is used for increases in asset and expense transactions and credit is used for increases in a liability, income (gain) or equity transaction. For bank transactions, money deposited in a checking account is treated as a credit transaction (increase) and money paid out is treated as a debit transaction, because checking account balances are bank liabilities. If cash is deposited, the cash becomes a bank asset and is treated as a debit transaction (increase) to a bank asset account. Thus a cash deposit becomes two equal increases: a debit to cash on hand and a credit to a customer's checking account. Your bank account is an asset to you, but a liability to your bank.  That makes for a third issue, namely perspective.

negative: The point of the article is not making your own investments vs. hiring a money manager. It is about passive low cost investments vs. active money managers.  This article is advising people to avoid active money managers because (A) even an extra 1% management fee adds up to a lot, and (B) active managers usually don't beat the low cost passive options anyway.

negative: "Am I getting it right that in India in terms of short selling in F&O market its what in the rest of the world is called naked short and you actually make promise to depositary that you will deliver that security you sold on settlement without actually owning the security or going through SLB mechanism? In Future and Options; there is no concept of short selling. You buy a future for a security / index. On the settlement day; the exchange determines the settlement price. The trade is closed in cash. i.e. Based on the settlement price, you [and the other party] will either get money [other party looses money] or you loose money [other party gets the money]. Similarly for Options; on expiry, the all ""In Money"" [or At Money] Options are settled in cash and you are credit with funds [the option writer is debited with funds]. If the option is ""out of money"" it expires and you loose the premium you paid to exercise the option."

negative: "The stock market is not a zero-sum game.  Some parts are (forex, some option trading), but plain old stock trading is not zero sum. That is to say, if you were to invest ""at random"", you would on average make money.  That's because the market as a whole makes money - it goes up over time (6-10% annually, averaged over time).  That's because you're not just gambling when you buy a stock; you're actually contributing money to a company (directly or indirectly), which it uses to fund activities that (on average) make money.  When you buy Caterpillar stock, you're indirectly funding Caterpillar building tractors, which they then sell for a profit, and thus your stock appreciates in value.  While not every company makes a profit, and thus not every stock appreciates in true value, the average one does. To some extent, buying index funds is pretty close to ""investing at random"".  It has a far lower risk quotient, of course, since you're not buying a few stocks at random but instead are buying all stocks in an index; but buying stocks from the S&P 500 at random would on average give the same return as VOO (with way more volatility). So for one, you definitely could do worse than 50/50; if you simply sold the market short (sold random stocks short), you would lose money over time on average, above and beyond the transaction cost, since the market will go up over time on average. Secondly, there is the consideration of limited and unlimited gains or losses. Some trades, specifically some option trades, have limited potential gains, and unlimited potential losses. Take for example, a simple call option.  If you sell a naked call option - meaning you sell a call option but don't own the stock - for $100, at a strike price of $20, for 100 shares, you make money as long as the price of that stock is under $21.  You have a potential to make $100, because that's what you sold it for; if the price is under $20, it's not exercised, and you just get that $100, free.   But, on the other hand, if the stock goes up, you could potentially be out any amount of money.  If the stock trades at $24, you're out $400-100 = $300, right?  (Plus transaction costs.)   But what if it trades at $60?  Or $100?  Or $10000?  You're still out 100 * that amount, so in the latter case, $1 million.  It's not likely to trade at that point, but it could. If you were to trade ""at random"", you'd probably run into one of those types of situations.  That's because there are lots of potential trades out there that nobody expects anyone to take - but that doesn't mean that people wouldn't be happy to take your money if you offered it to them.   That's the reason your 16.66 vs 83.33 argument is faulty:  you're absolutely right that if there were a consistently losing line, that the consistently winning line would exist, but that requires someone that is willing to take the losing line.  Trades require two actors, one on each side; if you're willing to be the patsy, there's always someone happy to take advantage of you, but you might not get a patsy."

negative: "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.  This second kind of buy order – i.e. made by someone who initially wrote a call option – is called a ""buy to close"", meaning the purchase of an offsetting position.  (The other kind of buy is the ""buy to open"".) Then, consider: Since an option buyer is free to re-sell the option purchased, and since an option writer (who ""sold to open"" the new contract) is also free to buy back an offsetting option, a process known as clearing is required to match remaining buyers exercising the call options held with the remaining option writers having open short positions for the contract.  For CBOE options, this clearing is performed by the Options Clearing Corporation.  Here's how it works (see here): What is the OCC? The Options Clearing Corporation is the sole issuer of all securities   options listed at the CBOE, four other U.S. stock exchanges and the   National Association of Securities Dealers, Inc. (NASD), and is the   entity through which all CBOE option transactions are ultimately   cleared. As the issuer of all options, OCC essentially takes the   opposite side of every option traded. Because OCC basically becomes   the buyer for every seller and the seller for every buyer, it allows   options traders to buy and sell in a secondary market without having   to find the original opposite party.   [...]   [emphasis above is mine] When a call option writer must deliver shares to a call option buyer exercising a call, it's called assignment.  (I have been assigned before, and it isn't pleasant to see a position called away that otherwise would have been very profitable if the call weren't written in the first place!) Also, re: ""I know my counter party cannot sell his shares"" ... that's not strictly true.  You are thinking of a covered call.  But, an option writer doesn't necessarily need to own the underlying shares.  Look up Naked call (Wikipedia).  Naked calls aren't frequently undertaken because a naked call ""is one of the riskiest options strategies because it carries unlimited risk"".  The average individual trader isn't usually permitted by their broker to enter such an order, but there are market participants who can do such a trade. Finally, you can learn more about options at The Options Industry Council (OIC)."

negative: You are NOT responsible for liquidating the position.  You will either end up retaining your 100 sh. after expiration, or they will be called away automatically. You don't have to do anything.  Extending profitability can mean different things, but a major consideration is whether or not you want to hold the stock or not.  If so, you can buy back the in-the-money call and sell another one at-the-money, or further out. There are lots of options.

negative: "Below I will try to explain two most common Binomial Option Pricing Models (BOPM) used. First of all, BOPM splits time to expiry into N equal sub-periods and assumes that in each period the underlying security price may rise or fall by a known proportion, so the value of an option in any sub-period is a function of its possible values in the following sub period. Therefore the current value of an option is found by working backwards from expiry date through sub-periods to current time. There is not enough information in the question from your textbook so we may assume that what you are asked to do is to find a value of a call option using just a Single Period BOPM. Here are two ways of doing this: First of all let's summarize your information: Current Share Price (Vs) = $70 Strike or exercise price (X) = $60 Risk-free rate (r) = 5.5% or 0.055 Time to maturity (t) = 12 months Downward movement in share price for the period (d) = $65 / $70 = 0.928571429 Upward movement in share price for the period (u) = 1/d = 1/0.928571429 = 1.076923077 ""u"" can be translated to $ multiplying by Vs => 1.076923077 * $70 = $75.38 which is the maximum probable share price in 12 months time. If you need more clarification here - the minimum and maximum future share prices are calculated from stocks past volatility which is a measure of risk. But because your textbook question does not seem to be asking this - you probably don't have to bother too much about it yet. Intrinsic Value: Just in case someone reading this is unclear - the Value of an option on maturity is the difference between the exercise (strike) price and the value of a share at the time of the option maturity. This is also called an intrinsic value.  Note that American Option can be exercised prior to it's maturity in this case the intrinsic value it simply the diference between strike price and the underlying share price at the time of an exercise. But the Value of an option at period 0 (also called option price) is a price you would normally pay in order to buy it. So, say, with a strike of $60 and Share Price of $70 the intrinsic value is $10, whereas if Share Price was $50 the intrinsic value would be $0. The option price or the value of a call option in both cases would be fixed.  So we also need to find intrinsic option values when price falls to the lowest probable and rises to the maximum probable (Vcd and Vcu respectively) (Vcd) = $65-$60 = $5 (remember if Strike was $70 then Vcd would be $0 because nobody would exercise an option that is out of the money) (Vcu) = $75.38-$60 = $15.38 1. Setting up a hedge ratio:  h = Vs*(u-d)/(Vcu-Vcd) h = 70*(1.076923077-0.928571429)/(15.38-5) = 1 That means we have to write (sell) 1 option for each share purchased in order to hedge the risks. You can make a simple calculation to check this, but I'm not going to go into too much detail here as the equestion is not about hedging. Because this position is risk-free in equilibrium it should pay a risk-free rate (5.5%). Then, the formula to price an option (Vc) using the hedging approach is: (Vs-hVc)(e^(rt))=(Vsu-hVcu) Where (Vc) is the value of the call option, (h) is the hedge ratio, (Vs) - Current Share Price, (Vsu) - highest probable share price, (r) - risk-free rate, (t) - time in years, (Vcu) - value of a call option on maturity at the highest probable share price. Therefore solving for (Vc): (70-1*Vc)(e^(0.055*(12/12))) = (75.38-1*15.38) => (70-Vc)*1.056540615 = 60 => 70-Vc = 60/1.056540615 => Vc = 70 - (60/1.056540615)  Which is similar to the formula given in your textbook, so I must assume that using 1+r would be simply a very close approximation of the formula above. Then it is easy to find that Vc = 13.2108911402 ~ $13.21 2. Risk-neutral valuation: Another way to calculate (Vc) is using a risk-neutral approach. We first introduce a variable (p) which is a risk-neutral probability of an increase in share price. p = (e^(r*t)-d)/(u-d) so in your case: p = (1.056540615-0.928571429)/(1.076923077-0.928571429) = 0.862607107 Therefore using (p) the (Vc) would be equal: Vc = [pVcu+(1-p)Vcd]/(e^(rt)) => Vc = [(0.862607107*15.38)+(0.137392893*5)]/1.056540615 => Vc = 13.2071229185 ~ $13.21 As you can see it is very close to the hedging approach. I hope this answers your questions. Also bear in mind that there is much more to the option pricing than this. The most important topics to cover are: Multi-period BOPM Accounting for Dividends Black-Scholes-Merton Option Pricing Model"

negative: Looking at the SPY option chain you posted, all of the call options with a strike price of 199.50 or higher have a bid of N/A.  That's because the ask price for all of those options is 0.01, and the bid price has to be less than the ask price, but buyers are not allowed to bid 0.00.  It's not accurate to say that no one wants to buy those calls - anyone who wanted to buy one of those calls would just buy it at the ask price of 0.01. So why are people selling those calls for just 0.01?  The further out of the money you go as you get closer to expiration, the less likely the underlying stock or ETF (SPY in this case) will go over the strike price, and the less you can sell it for.  SPY closed yesterday at about 195, and it would have to go up almost 2.5% today for the 199.50 calls to be in the money, and a 2.5% move in one day is extremely unlikely.

negative: If you're into math, do this thought experiment: Consider the outcome X of a random walk process (a stock doesn't behave this way, but for understanding the question you asked, this is useful): On the first day, X=some integer X1. On each subsequent day, X goes up or down by 1 with probability 1/2. Let's think of buying a call option on X. A European option with a strike price of S that expires on day N, if held until that day and then exercised if profitable, would yield a value Y = min(X[N]-S, 0). This has an expected value E[Y] that you could actually calculate. (should be related to the binomial distribution, but my probability & statistics hat isn't working too well today) The market value V[k] of that option on day #k, where 1 < k < N, should be V[k] = E[Y]|X[k], which you can also actually calculate. On day #N, V[N] = Y. (the value is known) An American option, if held until day #k and then exercised if profitable, would yield a value Y[k] = min(X[k]-S, 0).  For the moment, forget about selling the option on the market. (so, the choices are either exercise it on some day #k, or letting it expire) Let's say it's day k=N-1.  If X[N-1] >= S+1 (in the money), then you have two choices: exercise today, or exercise tomorrow if profitable. The expected value is the same. (Both are equal to X[N-1]-S). So you might as well exercise it and make use of your money elsewhere. If X[N-1] <= S-1 (out of the money), the expected value is 0, whether you exercise today, when you know it's worthless, or if you wait until tomorrow, when the best case is if X[N-1]=S-1 and X[N] goes up to S, so the option is still worthless. But if X[N-1] = S (at the money), here's where it gets interesting. If you exercise today, it's worth 0. If wait until tomorrow, there's a 1/2 chance it's worth 0 (X[N]=S-1), and a 1/2 chance it's worth 1 (X[N]=S+1). Aha! So the expected value is 1/2. Therefore you should wait until tomorrow. Now let's say it's day k=N-2.  Similar situation, but more choices: If X[N-2] >= S+2, you can either sell it today, in which case you know the value = X[N-2]-S, or you can wait until tomorrow, when the expected value is also X[N-2]-S. Again, you might as well exercise it now. If X[N-2] <= S-2, you know the option is worthless. If X[N-2] = S-1, it's worth 0 today, whereas if you wait until tomorrow, it's either worth an expected value of 1/2 if it goes up (X[N-1]=S), or 0 if it goes down, for a net expected value of 1/4, so you should wait. If X[N-2] = S, it's worth 0 today, whereas tomorrow it's either worth an expected value of 1 if it goes up, or 0 if it goes down -> net expected value of 1/2, so you should wait. If X[N-2] = S+1, it's worth 1 today, whereas tomorrow it's either worth an expected value of 2 if it goes up, or 1/2 if it goes down (X[N-1]=S) -> net expected value of 1.25, so you should wait. If it's day k=N-3, and X[N-3] >= S+3 then E[Y] = X[N-3]-S and you should exercise it now; or if X[N-3] <= S-3 then E[Y]=0.  But if X[N-3] = S+2 then there's an expected value E[Y] of (3+1.25)/2 = 2.125 if you wait until tomorrow, vs. exercising it now with a value of 2; if X[N-3] = S+1 then E[Y] = (2+0.5)/2 = 1.25, vs. exercise value of 1; if X[N-3] = S then E[Y] = (1+0.5)/2 = 0.75 vs. exercise value of 0; if X[N-3] = S-1 then E[Y] = (0.5 + 0)/2 = 0.25, vs. exercise value of 0; if X[N-3] = S-2 then E[Y] = (0.25 + 0)/2 = 0.125, vs. exercise value of 0. (In all 5 cases, wait until tomorrow.) You can keep this up; the recursion formula is E[Y]|X[k]=S+d = {(E[Y]|X[k+1]=S+d+1)/2 + (E[Y]|X[k+1]=S+d-1) for N-k > d > -(N-k), when you should wait and see} or {0 for d <= -(N-k), when it doesn't matter and the option is worthless} or {d for d >= N-k, when you should exercise the option now}. The market value of the option on day #k should be the same as the expected value to someone who can either exercise it or wait. It should be possible to show that the expected value of an American option on X is greater than the expected value of a European option on X. The intuitive reason is that if the option is in the money by a large enough amount that it is not possible to be out of the money, the option should be exercised early  (or sold), something a European option doesn't allow, whereas if it is nearly at the money, the option should be held, whereas if it is out of the money by a large enough amount that it is not possible to be in the money, the option is definitely worthless. As far as real securities go, they're not random walks (or at least, the probabilities are time-varying and more complex), but there should be analogous situations. And if there's ever a high probability a stock will go down, it's time to exercise/sell an in-the-money American option, whereas you can't do that with a European option. edit: ...what do you know: the computation I gave above for the random walk isn't too different conceptually from the Binomial options pricing model.

negative: 1) Yes, both of your scenarios would lead to earning $10 on the transaction, at the strike date. If you purchased both of them (call it Scenario 3), you would make $20. 2) As to why this transaction may not be possible, consider the following: The Call and Put pricing you describe may not be available. What you have actually created is called 'arbitrage' - 2 identical assets can be bought and sold at different prices, leading to a zero-risk gain for the investor. In the real marketplace, if an option to buy asset X in January cost $90, would an option to sell asset X in January provide $110?  Without adding additional complexity about the features of asset x or the features of the options, buying a Call option is the same as selling a Put option [well, when selling a Put option you don't have the ability to choose whether the option is exercised, meaning buying options has value that selling options does not, but ignore that for a moment]. That means that you have arranged a marketplace where you would buy a Call option for only $90, but the seller of that same option would somehow receive $110.  For added clarity, consider the following: What if, in your example, the future price ended up being $200? Then, you could exercise your call option, buying a share for $90, selling it for $200, making $110 profit. You would not exercise your put option, making your total profit $110. Now consider: What if, in your example, the future price ended up being $10? You would buy for $10, exercise your put option and sell for $110, making a profit of $100. You would not exercise your call option, making your total profit $100. This highlights that if your initial assumptions existed, you would earn money (at least $20, and at most, unlimited based on a skyrocketing price compared to your $90 put option) regardless of the future price. Therefore such a scenario would not exist in the initial pricing of the options. Now perhaps there is an initial fee involved with the options, where the buyer or seller pays extra money up-front, regardless of the future price. That is a different scenario, and gets into the actual nature of options, where investors will arrange multiple simultaneous transactions in order to limit risk and retain reward within a certain band of future prices.  As pointed out by @Nick R, this fee would be very significant, for a call option which had a price set below the current price. Typically, options are sold 'out of the money' initially, which means that at the current share price (at the time the option is purchased), executing the option would lose you money. If you purchase an 'in the money' option, the transaction cost initially would by higher than any apparent gain you might have by immediately executing the option. For a more realistic Options example, assume that it costs $15 initially to buy either the Call option, or the Put option. In that case, after buying both options as listed in your scenarios you would earn a profit if the share price exceeded $120 [The $120 sale price less the $90 call option = $30, which is your total fee initially], or dropped below $80 [The $110 Put price less the $80 purchase price = $30]. This type of transaction implies that you expect the price to either swing up, or swing down, but not fall within the band between $80-$120. Perhaps you might do this if there was an upcoming election or other known event, which might be a failure or success, and you think the market has not properly accounted for either scenario in advance. I will leave further discussion on that topic [arranging options of different prices to create specific bands of profitability / loss] to another answer (or other questions which likely already exist on this site, or in fact, other resources), because it gets more complicated after that point, and is outside the root of your question.

negative: "One alternative strategy you may want to consider is writing covered calls on the stock you have ""just sitting there"".  This will allow you to earn a return (the premium from the calls) without necessarily having to give up your holding. As a brief overview, ""options"" are derivatives that give the holder the right (or option) to buy or sell shares at a specified price.  Holders of call options with a strike prike $x on a particular security have the right to purchase that security at the strike price $x.  Conversely, holders of put options with a strike price of $x have the right to sell that security at the strike price $x.  Always on the other side of a call or put option is a person that has sold the option, which is called ""writing"" the option.  If this person writes a call option, then he will be obligated to sell a certain amount of stock (100 shares per contract) at the strike price if that option is exercised.  A writer of a put option will be obligated to by 100 shares per contract at the strike price if that option is exercised. Covered calls involve writing call contracts on stock that you own.  For example, say you own 100 shares of AAPL, and that AAPL is currently trading for $330.  You decide to write a Jan 21, 2012 call on these shares at a strike price of $340, earning you a premium of say $300. Two things can now happen: if the price of AAPL is not at least $340 on January 21, then the options are ""out of the money"" and will expire unexercised (why exercise an option to buy at $340 when you can buy at the currently cheaper market price?).  You keep your AAPL stock plus the $300 premium you earn.  If, however, the price of AAPL is greater than $340, the option will be exercised and you will now be required to sell the shares you own at $340.  You will earn a return of $10/share ($340-$330), plus the $300 premium from the call option.  You still make out in the end, but have unfortunately incurred an opportunity cost, as had you not written the call option you would have been able to sell at the market price, which is higher than the $340 strike price. Covered calls are considered relatively safe and conservative, however the strategy is most effective for stocks that are expected to stay within a relatively narrow price range for the duration of the contract.  They do provide one option of earning additional money on stocks you are currently holding, albeit at the risk of giving up some returns if the stock price rises above the strike price."

negative: "Not all call options that have value at expiration, exercise by purchasing the security (or attempting to, with funds in your account).   On ETNs, they often (always?) settle in cash.  As an example of an option I'm currently looking at, AVSPY, it settles in cash (please confirm by reading the documentation on this set of options at http://www.nasdaqomxtrader.com/Micro.aspx?id=Alpha, but it is an example of this).  There's nothing it can settle into (as you can't purchase the AVSPY index, only options on it).  You may quickly look (wikipedia) at the difference between ""American Style"" options and ""European Style"" options, for more understanding here. Interestingly I just spoke to my broker about this subject for a trade execution.  Before I go into that, let me also quickly refer to Joe's answer:  what you buy, you can sell.  That's one of the jobs of a market maker, to provide liquidity in a market.  So, when you buy a stock, you can sell it.  When you buy an option, you can sell it.  That's at any time before expiration (although how close you do it before the closing bell on expiration Friday/Saturday is your discretion).  When a market maker lists an option price, they list a bid and an ask.  If you are willing to sell at the bid price, they need to purchase it (generally speaking).  That's why they put a spread between the bid and ask price, but that's another topic not related to your question -- just note the point of them buying at the bid price, and selling at the ask price -- that's what they're saying they'll do. Now, one major difference with options vs. stocks is that options are contracts. So, therefore, we can note just as easily that YOU can sell the option on something (particularly if you own either the underlying, or an option deeper in the money).  If you own the underlying instrument/stock, and you sell a CALL option on it, this is a strategy typically referred to as a covered call, considered a ""risk reduction"" strategy.  You forfeit (potential) gains on the upside, for money you receive in selling the option. The point of this discussion is, is simply: what one buys one can sell;  what one sells one can buy -- that's how a ""market"" is supposed to work.  And also, not to think that making money in options is buying first, then selling.  It may be selling, and either buying back or ideally that option expiring worthless. -- Now, a final example.  Let's say you buy a deep in the money call on a stock trading at $150, and you own the $100 calls.  At expiration, these have a value of $50.  But let's say, you don't have any money in your account, to take ownership of the underlying security (you have to come up with the additional $100 per share you are missing).  In that case, need to call  your broker and see how they handle it, and it will depend on the type of account you have (e.g. margin or not, IRA, etc).  Generally speaking though, the ""margin department"" makes these decisions, and they look through folks that have options on things that have value, and are expiring, and whether they have the funds in their account to absorb the security they are going to need to own.  Exchange-wise, options that have value at expiration, are exercised.  But what if the person who has the option, doesn't have the funds to own the whole stock? Well, ideally on Monday they'll buy all the shares with the options you have at the current price, and immediately liquidate the amount you can't afford to own, but they don't have to.  I'm mentioning this detail so that it helps you see what's going or needs to go on with exchanges and brokerages and individuals, so you have a broader picture."

negative: Register an account with multiple transfer services and see who will actually give you the best rate, including any fees charged by the service itself, at the time you want to make the transfer. Research the available methods to get the money into and out of the transfer service to five the lowest cost options, which would ideally be free on both ends. Be patient. It can take a week for money to arrive in your recipients account depending on the methods of getting the money into and out of the transfer service. You might also be called to verify the transaction before it goes through.

negative: Go back to the dealership and leave the car there. Call your local news. They love these stories. After the news is out if they still won't give you your money back and void the contract then call the police. This is illegal and the business has violated the law.   Another option is to go to the police first. After the police report then hire a lawyer to sue the dealership. Then call the local news. This method may take longer, but it will have the biggest impact.

negative: "First, to mention one thing - better analysis calls for analyzing a range of outcomes, not just one; assigning a probability on each, and comparing the expected values. Then moderating the choice based on risk tolerance. But now, just look at the outcome or scenario of 3% and time frame of 2 days. Let's assume your investable capital is exactly $1000 (multiply everything by 5 for $5,000, etc.). A. Buy stock: the value goes to 103; your investment goes to $1030; net return is $30, minus let's say $20 commission (you should compare these between brokers; I use one that charges 9.99 plus a trivial government fee). B. Buy an call option at 100 for $0.40 per share, with an expiration 30 days away (December 23). This is a more complicated. To evaluate this, you need to estimate the movement of the value of a 100 call, $0 in and out of the money, 30 days remaining, to the value of a 100 call, $3 in the money, 28 days remaining. That movement will vary based on the volatility of the underlying stock, an advanced topic; but there are techniques to estimate that, which become simple to use after you get the hang of it. At any rate, let's say that the expected movement of the option price in this scenario is from $0.40 to $3.20. Since you bought 2500 share options for $1000, the gain would be 2500 times 2.8 = 7000. C. Buy an call option at 102 for $0.125 per share, with an expiration 30 days away (December 23). To evaluate this, you need to estimate the movement of the value of a 102 call, $2 out of the money, 30 days remaining, to the value of a 102 call, $1 in the money, 28 days remaining. That movement will vary based on the volatility of the underlying stock, an advanced topic; but there are techniques to estimate that, which become simple to use after you get the hang of it. At any rate, let's say that the expected movement of the option price in this scenario is from $0.125 to $ 1.50. Since you bought 8000 share options for $1000, the gain would be 8000 times 1.375 = 11000. D. Same thing but starting with a 98 call. E. Same thing but starting with a 101 call expiring 60 days out. F., ... Etc. - other option choices. Again, getting the numbers right for the above is an advanced topic, one reason why brokerages warn you that options are risky (if you do your math wrong, you can lose. Even doing that math right, with a bad outcome, loses). Anyway you need to ""score"" as many options as needed to find the optimal point. But back to the first paragraph, you should then run the whole analysis on a 2% gain. Or 5%. Or 5% in 4 days instead of 2 days. Do as many as are fruitful. Assess likelihoods. Then pull the trigger and buy it. Try these techniques in simulation before diving in! Please! One last point, you don't HAVE to understand how to evaluate projected option price movements if you have software that  does that for you. I'll punt on that process, except to mention it. Get the general idea? Edit P.S. I forgot to mention that brokers need love for handling Options too. Check those commission rates in your analysis as well."

negative: "This is because volatility is cumulative and with less time there is less cumulative volatility. The time value and option value are tied to the value of the underlying.  The value of the underlying (stock) is quite influenced by volatility, the possible price movement in a given span of time.  Thirty days of volatility has a much broader spread of values than two days, since each day benefits from the possible price change of the prior days.  So if a stock could move up to +/- 1% in a day, then compounded after 5 days it could be +5%, +0%, or -5%.  In other words, this is compounded volatility. Less time means far less volatility, which is geometric and not linear.  Less volatility lowers the value of the underlying.  See Black-Scholes for more technical discussion of this concept. A shorter timeframe until option expiration means there are fewer days of compounded volatility.  So the expected change in the underlying will decrease geometrically.  The odds are good that the price at T-5 days will be close to the price at T-0, much more so than the prices at T-30 or T-90. Additionally, the time value of an American option is the implicit put value (or implicit call).  While an ""American"" option lets you exercise prior to expiry (unlike a ""European"" option, exercised only at expiry), there's an implicit put option in a call (or an implicit call in a put option).  If you have an American call option of 60 days and it goes into the money at 30 days, you could exercise early.  By contract, that stock is yours if you pay for it (or, in a put, you can sell whenever you decide). In some cases, this may make sense (if you want an immediate payoff or you expect this is the best price situation), but you may prefer to watch the price.  If the price moves further, your gain when you use the call may be even better.  If the price goes back out of the money, then you benefited from an implicit put.  It's as though you exercised the option when it went in the money, then sold the stock and got back your cash when the stock went out of the money, even though no actual transaction took place and this is all just implicit. So the time value of an American option includes the implicit option to not use it early.  The value of the implicit option also decreases in a nonlinear fashion, since the value of the implicit option is subject to the same valuation principles. But the larger principle for both is the compounded volatility, which drops geometrically."

negative: There are really only two options: invoiced, or paid. Everything else is not relevant from a tax or accounting point of view. Of course, if you're invoicing as you go along or collecting deposits once things are in your order books, then that amount of money is relevant. Working things out according to when you invoice is called working on an accrual basis. Working it out according to when you get paid is called working on a cash basis. Wikipedia explains the distinction, which also applies to your expenses: when did you incur them (get the bill) vs when you did you pay it. In some jurisdictions and for some kinds of companies, you can choose which of these two bases to work on (but no other basis.) There is advice on the UK government website about keeping your accounts. It includes a link to a PDF and on page 15 of that 100 page PDF it states: 2.14 The financial statements, with the exception of cash flow information, shall be prepared on the accruals basis of accounting. HENCE, ALL INCOME AND CHARGES RELATING TO THE FINANCIAL YEARTO WHICH THE ACCOUNTS RELATE MUST BE TAKEN INTO ACCOUNT, WITHOUT   REGARD TO THE DATE OF PAYMENT OR RECEIPT. That seems pretty clear to me. When you invoice. Period.

negative: Automatic exercisions can be extremely risky, and the closer to the money the options are, the riskier their exercisions are. It is unlikely that the entire account has negative equity since a responsible broker would forcibly close all positions and pursue the holder for the balance of the debt to reduce solvency risk.  Since the broker has automatically exercised a near the money option, it's solvency policy is already risky. Regardless of whether there is negative equity or simply a liability, the least risky course of action is to sell enough of the underlying to satisfy the loan by closing all other positions if necessary as soon as possible. If there is a negative equity after trying to satisfy the loan, the account will need to be funded for the balance of the loan to pay for purchases of the underlying to fully satisfy the loan. Since the underlying can move in such a way to cause this loan to increase, the account should also be funded as soon as possible if necessary. Accounts after exercise For deep in the money exercised options, a call turns into a long underlying on margin while a put turns into a short underlying. The next decision should be based upon risk and position selection.  First, if the position is no longer attractive, it should be closed.  Since it's deep in the money, simply closing out the exposure to the underlying should extinguish the liability as cash is not marginable, so the cash received from the closing out of the position will repay any margin debt. If the position in the underlying is still attractive then the liability should be managed according to one's liability policy and of course to margin limits. In a margin account, closing the underlying positions on the same day as the exercise will only be considered a day trade.  If the positions are closed on any business day after the exercision, there will be no penalty or restriction. Cash option accounts While this is possible, many brokers force an upgrade to a margin account, and the ShareBuilder Options Account Agreement seems ambiguous, but their options trading page implies the upgrade. In a cash account, equities are not marginable, so any margin will trigger a margin call.  If the margin debt did not trigger a margin call then it is unlikely that it is a cash account as margin for any security in a cash account except for certain options trades is 100%. Equities are convertible to cash presumably at the bid, so during a call exercise, the exercisor or exercisor's broker pays cash for the underlying at the exercise price, and any deficit is financed with debt, thus underlying can be sold to satisfy that debt or be sold for cash as one normally would. To preempt a forced exercise as a call holder, one could short the underlying, but this will be more expensive, and since probably no broker allows shorting against the box because of its intended use to circumvent capital gains taxes by fraud.  The least expensive way to trade out of options positions is to close them themselves rather than take delivery.

negative: This can be done, you can be prosecuted for some forms of it, in any case there are more riskless ways of doing what you suggested. First, buying call options from market makers results in market makers buying shares at the same delta as the call option. (100 SHARES X DELTA = How many shares MM's bought). You can time this with the volume and depth of the shares market to get a bigger resulting move caused by your options purchase to get bigger quote changes in your option. So on expiration day you can be trade near at the money options back and forth between being out the money and in the money. You would exit the position into liquidity at a profit. The risk here is that you can be sitting on a big options position, where the commissions costs get really big, but you can spread this out amongst several options contracts. Second, you can again take advantage of market maker inefficiencies by getting your primary position (whether in the share market or options market) placed, and then your other position being a very large buy order a few levels below the best bid. Many market makers and algorithms will jump in front of your, they think they are being smart, but it will raise the best bid and likely make a few higher prints for the mark, raising the price of your call option. And eventually remove your large buy order. Again, you exit into liquidity. This is called spoofing. There have been some regulatory actions against people in doing this in the last few years. As for consequences, you need to put things into perspective. US capital market regulators have the most nuanced regulations and enforcement actions of worldwide capital market regulators, and even then they get criticized for being unable or unwilling to curb these practices. With that perspective American laws are basically a blueprint on what to do in 100 other country's stock exchanges, where the legislature has never gotten around to defining the same laws, the securities regulator is even more underfunded and toothless, and the markets more inefficient. Not advice, just reality.

negative: "I look for buying a call option only at the money, but first understand the background above: Let's suppose X stock is being traded by $10.00 and it's January The call option is being traded by $0.20 with strike $11.00 for February. (I always look for 2% prize or more) I buy 100 stocks by $10.00 each and sell the option, earning $0.20 for each X stock. I will have to deliver my stocks by $11.00 (strike value agreed). No problem for me here, I took the prize plus the gain of $1.00. (continuing from item 3) I still can sell the option for the next month with strike equal or higher than that I bought. For instance, I can sell a call option of strike $10.00 and it might be worth to deliver stocks by $10.00 and take the prize. (continuing from item 3) Probably, it won't be possible to sell a call option with strike at the price that I paid for the stock, but that's not a problem. At the end of the option life (in February), the strike was $11.00 but the stock's price is $8.00. I got the $0.20 as prize and my stocks are free for trade again. I'll sell the call option for March with strike $9.00 (taking around 2% of prize). Well, I don't want to sell my stocks by $9.00 and make loss, right? But I'm selling the call option anyway. Then I wait till the price of the stock gets near the strike value (almost ATM) and I ""re-buy"" the option sold (Example: [StockX]C9 where C means month = March) and sell again the call option with higher strike to April (Example [StockX]D10, where D means month = April) PS.: At item 9 there should be no loss between the action of ""re-buy"" and sell to roll-out to the next month. When re-buying it with the stock's price near the strike, option value for March (C9) will be lower than when selling it to April (D10). This isn't any rule to be followed, this is just a conservative (I think they call it hedge) way to handle options and stocks. Few free to make money according to your goals and your style. The perfect rule is the one that meet your expectation, don't take the generalized rules too serious."

negative: "Some 401k plans allow you to make ""supplemental post-tax contributions"". basically, once you hit the pre-tax contribution limit (17.5k$ in 2014), you are then allowed to contribute funds on a post-tax basis. Because of this timing, they are sometimes called ""spillover"" contributions. Usually, this option is advertised as a way of continuing to get company match even if you accidentally hit the pre-tax limit.  But if you actually pay attention to your finances, it is instead a handy way to put away additional tax-advantaged money.  That said, you would only want to use this option if you already maxed out your pre-tax and Roth options since you don't get the traditional tax break on contributions or the Roth tax break on the earnings. However, when you leave the company, you can transfer the post-tax money directly into a Roth IRA when you transfer the pre-tax money, match, and earnings into a traditional IRA."

negative: "I strongly suggest you read up the Option Greeks. You can be right about a stocks price movement and still not make money b/c other factors come into play from time or volatility. For a ""free"" option hedge you can look at collars. Buying puts and selling calls to offset the debit you pay for the transaction. Ex: AAPL is 115, You buy the 110 puts and sell the 120 calls. This gives you a collar around he current price. Your hedged below 110 and can still participate in upside move to 120. Also look into time value. Time decays exponentially in the last 30 days. If you are long this hurts you, if you are short(selling) this is good. Be sure to take this into account. Delta: relation of the option to the underlying stock move on a .01-1 scale, .50 is ""normal."" Deep in the money options have higher deltas. It is possible other factors can offset this delta move. This is why people will lose money on earnings plays even though they are right.  EX: Say you buy an AAPL call at 120, earnings comes out and the stock goes to 121. Even though you are ""in the money"" your contract may still have less value than what you paid because of VOLATILITY collapse. The market place knows earnings move a stock and that is factored into the price of the options expected volatility. As mentioned watch out for dividend dates. Always be aware of dividend dates and earnings dates and if your contract is going to cover one of these events. Interest rates have an effect as well but since the Fed has near 0 rates there is little impact at the present. Though this could certainly change if the fed starts raising rates. Research the Black Scholes Pricing model. Whenever you trade always think about what the other guys is thinking. Sometimes we forget their is someone else on the other side of my trade that thinks essentially the exact opposite of me. Its a zero sum game. As far as choosing strikes you can look at calculating the At THe money straddle to see if the options are ""cheap"" [stock Price * Implied Volatility (for 30, 60, 90 days Depending on your holding period)* Sq root of days to expiration] / 19 (which is sq root of days/yr) Add and subtract this number to the current stock price to give you an approximate 1 standard deviation of expected price movement. Keeping with our example. AAPL at 115, lets say your formula spits out a 6; therefore price range is expected to be 109 to 121 for the time period. Helpful for selling options, I would sell the 122  call or the 108 puts. Hope this helps. Start small and get a feel for things."

negative: A long straddle using equity would be more akin to buying a triple leveraged ETF and an inverse triple leveraged ETF, only because one side will approach zero while the other can theoretically increase to infinity, in a short time span before time decay hits in. The reason your analogy fails is because the delta is 1.0 on both sides of your trade. At the money options, a necessary requirement for a straddle, have a delta of .5 There is an options strategy that uses in the money calls and puts with a delta closer to 1.0 to create an in the money strangle. I'm not sure if it is more similar to your strategy, an analogous options strategy would be better than yours as it would not share the potential for a margin call.

negative: "I assume that whatever you're holding has lost a considerable amount of its value then? What sort of instrument are we talking about? If the margin call is 14k on something you borrowed against the 6900 you're a bit more leveraged than ""just"" another 100%. The trading company you're using should be able to tell you exactly what happens if you can't cover the margin call, but my hunch is that selling and taking the cash out ceased to be an option roughly at the time they issued the margin call. Being labelled as a day trader or not most likely did not have anything to do with that margin call - they're normally issued when one or more of your leveraged trades tank and you don't have enough money in the account to cover the shortfall. Not trying to sound patronising but the fact that you needed to ask this question suggests to me that you shouldn't have traded with borrowed money in the first place."

negative: "There are different schools of thought. You can ask the IRS - and it would not surprise me if you got different answers on different phone calls. One interpretation is that a put is not ""substantially identical"" to the disposed stock, therefore no wash is triggered by that sale. However if that put is exercised, then you automatically purchase the security, and that is identical. As to whether the IRS (or your brokerage firm) recognizes the identical security when it falls out of an option, I can't say; but technically they could enforce it because the rule is based on 30 days and a ""substantially identical"" stock or security. In this interpretation (your investor) would probably at least want to stay out of the money in choosing a strike price, to avoid exercise; however, options are normally either held or sold, rather than be exercised, until at or very close to the expiration date (because time value is left on the table otherwise). So the key driver in this interpretation would be expiration date, which should be at least 31 days out from the stock sale; and it would be prudent to sell an out of the money put as well, in order to avoid the wash sale trigger. However there is also a more unfavorable opinion - see fairmark.com/capgain/wash/wsoption.htm where they hold that a ""deep in the money"" option is an immediate trigger (regardless of exercise). This article is sage, in that they say that the Treasury (IRS) may interpret an option transaction as a wash if it's ballpark to being exercisable. And, if the IRS throws paper, it always beats each of paper, rock and scissors :( A Schwab article (""A Primer on Wash Sales"") says, if the CUSIPs match, bang, wash. This is the one that they may interpret unfavorably on in any case, supporting Schwab's ""play it safe"" position: ""3. Acquire a contract or option to buy substantially identical stock or securities..."" . This certainly nails buying a call. As to selling a put, well, it is at least conceivable that an IRS official would call that a contract to buy! SO it's simply not a slam dunk; there are varying opinions that you might describe as ranging from ""hell no"" to ""only if blatant."" If you can get an ""official"" predetermination, or you like to go aggressive in your tax strategy, there's that; they may act adversely, so Caveat Taxfiler!"

negative: "So, if an out-of-the-money option (all time value) has a price P (say $3.00), and there are N days... The extrinsic value isn't solely determined by time value as your quote suggests. It's also based on volatility and demand. Here is a quote from http://www.tradingmarkets.com/options/trading-lessons/the-mystery-of-option-extrinsic-value-767484.html distinguishing between extrinsic time value and extrinsic non-time value: The time value of an option is entirely predictable. Time value premium declines at an accelerating rate, with most time decay occurring in the last one to two months before expiration. This occurs on a predictable curve. Intrinsic value is also predictable and easily followed. It is worth one point for every point the option is in the money. For example, a call with a strike of 30 has three points of intrinsic value when the current value of the underlying stock is $33 per share; and a 40 put has two points of intrinsic value when the underlying stock is worth $38. The third type of premium, extrinsic value, increases or decreases when the underlying stock changes and when the distance between current value of stock and strike of the option get closer together. As a symptom of volatility, extrinsic value may be greater for highly volatile underlying stock, and lower for less volatile stocks. Extrinsic value is the only classification of option premium that is unpredictable. The SPYs you point out probably had a volatility component affecting value. This portion is a factor of expectations or uncertainty. So an event expected to conclude prior to expiration, but of unknown outcome can cause theta to be higher than p/n. For example, a drug company is being sued and the outcome of a trial will determine whether that company pays out millions or not. The extrinsic will be higher than p/n prior to the outcome of the trial then drops after.  Of course, the most common situation where this happens is earnings. After the announcement, it's not unusual to see a dramatic drop in the extrinsic portion of options. This is why sometimes a new option trader gets angry when buying calls prior to earnings. When 'surprise' good earnings are announced as hoped, the rise is stock price is largely offset by a fall in extrinsic value giving call holders little or no gain! As for the reverse situation where theta is lower than p/n would expect? Well you can actually have negative theta meaning the extrinsic portion rises over time. (this statement is a little confusing because theta is usually described as negative, but since you describe it as a positive number, negative here means the opposite of what you'd expect).  This is a quote from ""Option Volatility & Pricing"". Keep in mind that they use 'positive' theta to mean the time value increases up over time: Is it ever possible for an option to have a positive theta such that if nothing changes the option will be worth more tomorrow than it is today? When futures options are subject to stock-type settlement, as they currently are in the United States, the carrying cost on a deeply in-the-money option, either a call or a put, can, under some circumstances, be greater than the volatility component. If this happens, and the option is European (no early exercise permitted), it will have a theoretical value less than parity (less than intrinsic value). As expiration approaches, the value of the option will slowly rise to parity. Hence, the option will have a positive theta. Sheldon Natenberg. Option Volatility & Pricing: Advanced Trading Strategies and Techniques (Kindle Locations 1521-1525). Kindle Edition."

negative: A long call options spread. In this case, a bet that the USO ETF would recover to $35. You can see, I got in when USO was $28, and it's continued to drop, but it has till Jan '17 to recover. The spread is set up to give leverage, when I entered the trade, a 50% recovery would result in a 200% gain, or 3X my bet. An option spread can be bought using any two strikes, and with different payouts depending on how far out of the money the strikes are.

negative: The nature of options requires you to understand that they are essentially a bet. In one sense, so is investing in stocks. We imagine a bell curve (first mistake) with a median return at 10%/yr and a standard deviation of about 14%. Then we say that odds are that over some period of time a monte-carlo simulation can give us the picture of the likely returns.  Now, when you buy short term options, say one month or so, you are hoping the outcome is a rise in price that will yield some pretty high return, right?  There was a time I noticed a particular stock would move a large percent based on earnings. And earnings were a day before options expiration. So I'd buy the call that was just out of the money and if the surprise was up, I'd make 3-4X my money. But I was always prepared to lose it all and often did. I never called this investing.  I know of no recovery strategy. Sorry.

negative: Rather than rolling the 401(k) to a new employer's plan, you should roll it into a traditional IRA.  You get more options for the money, there's no limit on how much you can roll over, and you have more control over the money.  If you do a direct rollover, there's no taxes or penalties involved. I'd recommend against taking any money out of the 401(k).  With the numbers you give above, it's like borrowing money at 31.5% interest, which is pretty high, and you're sacrificing your future retirement.  If you leave that money alone to grow with compounding, you'll have a lot more when you retire.  If you're not familiar with the concept of compound interest, it's worth reading up on - the numbers will blow you away. At the very least, if you desperately need to get $3000 out of it, take out just enough to net $3000 after taxes and penalties (not quite $4400 using the numbers you give) and do a rollover with the rest.  At least that way, you're keeping more in the IRA (just over $8600, vs the $5000 in your proposed scenario). Overall, I really recommend you find a way to accomplish your goals without touching your retirement savings.