- Options Definition
- Carnival Corporation (CCL) Options Chain - Yahoo Finance
- Facebook, Inc. (FB) Options Chain - Yahoo Finance
When buying a call option, the strike price of an option for a stock, for example, will be determined based on the current price of that stock. For example, if a share of a given stock (like Amazon ( AMZN ) - Get Report ) is $6,798, any strike price (price of the call option) that is above that share price is considered to be out of the money. Conversely, if the strike price is under the current share price of the stock, it&apos s considered in the money. xA5
For call options, in the money contracts will be those whose underlying asset&apos s price (stock, ETF, etc.) is above the strike price. For put options, the contract will be in the money if the strike price is below the current price of the underlying asset (stock, ETF, etc.).
Carnival Corporation (CCL) Options Chain - Yahoo Finance
This web site discusses exchange-traded options issued by The Options Clearing Corporation. No statement in this web site is to be construed as a recommendation to purchase or sell a security, or to provide investment advice. Options involve risk and are not suitable for all investors. Prior to buying or selling an option, a person must receive a copy of Characteristics and Risks of Standardized Options. Copies of this document may be obtained from your broker, from any exchange on which options are traded or by contacting The Options Clearing Corporation, 675 S. Franklin Street, Suite 6755, Chicago, IL 65656.
Facebook, Inc. (FB) Options Chain - Yahoo Finance
The longer an option has before its expiration date, the more time it has to actually make a profit, so its premium (price) is going to be higher because its time value is higher. Conversely, the less time an options contract has before it expires, the less its time value will be (the less additional time value will be added to the premium).
A call option is a contract that gives the investor the right to buy a certain amount of shares (typically 655 per contract) of a certain security or commodity at a specified price over a certain amount of time. For example, a call option would allow a trader to buy a certain amount of shares of either stocks, bonds, or even other instruments like ETFs or indexes xA5 at a future time (by the expiration of the contract). xA5
There are lots of examples of options trading that largely depend on which strategy you are using. However, as a basic idea of what a typical call or put option would be, let&apos s consider a trader buying a call and put option on Microsoft ( MSFT ) - Get Report . xA5
So, in other words, if an option has a lot of time before it expires, the more additional time value will be added to the premium (price) - and the less time it has before expiration, the less time value will be added to the premium.
If you&apos re buying a call option, it means you want the stock (or other security) to go up in price so that you can make a profit off of your contract by exercising your right to buy those stocks (and usually immediately sell them to cash in on the profit). xA5
If an option (whether a put or call option) is going to be out of the money by its expiration date, you can sell options in order to collect a time premium. xA5
There are numerous strategies you can employ when options trading - all of which vary on risk, reward and other factors. And while there are dozens of strategies (most of them fairly complicated), here are a few main strategies that have been recommended for beginners. xA5
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When buying or selling options, the investor or trader has the right to exercise that option at any point up until the expiration date - so simply buying or selling an option doesn&apos t mean you actually have to exercise it at the buy/sell point. Because of this system, xA5 options are considered derivative securities - which means their price is derived from something else (in this case, from the value of assets like the market, securities or other underlying instruments). For this reason, options are often considered less risky than stocks (if used correctly). xA5
For example, xA5 if you bought a long call option (remember, a call option is a contract that gives you the right to buy shares later on) for 655 shares of Microsoft stock at $665 per share for December 6, you would have the right to buy 655 shares of that stock at $665 per share regardless of if the stock price changed or not by December 6. For this long call option, you would be expecting the price of Microsoft to increase, thereby letting you reap the profits when you are able to buy it at a cheaper cost than its market value. However, if you decide not to exercise that right to buy the shares, you would only be losing the premium you paid for the option since you aren&apos t obligated to buy any shares. xA5
Put options operate in a similar fashion to calls, except you want the security to drop in price if you are buying a put option in order to make a profit (or sell the put option if you think the price will go up). xA5 xA5