This section is about option basics. Begin here if you are new to options.
Once you understand the fundamental principals of options trading, consider moving on to our explanation of different types of option strategies.
- What Is An Option – In this section we go over the basics of what an option is. Read this first before moving on to the other sections.
- Strike Price – A strike price is the price at which the owner of an option can buy or sell the underlying.
- Expiration Date – The expiration date is the last day an owner of an options contract can buy or sell the underlying.
- What Is A Call Option – A call option gives the buyer the right to purchase a set amount of an underlying security, at a certain price, within a certain time frame. The seller of the call option has the obligation to deliver the underlying security at the stated price, within the time frame.
- What Is A Put Option – A put option gives the buyer the right to sell a set amount of an underlying security, at a certain price, within a certain time frame. the seller of the put option has the obligation to take possession of the underlying security at the stated price, within the time frame.
- Option Premium – The premium is the amount the buyer of an option pays the seller of an option.
- Option Quotes – Option quotes are usually listed by month, by strike. This is called the option chain.
- Option Order Types – There are three primary types of option order: Limit Order, Market Order and Stop Loss Order.
- Find A Broker – There are several factors in finding an options brokers. These are some of the more important ones.
- Enter An Options Trade – Here are some basic steps to enter an options trade.