Options Basics Tutorial

A call option is a contract that gives you the right, but not the obligation, to buy a stock at a predetermined price (called the strike price) within a certain time period.

Option trading can be speculative in nature and carry substantial risk of loss.

Buying and Selling Calls and Puts: Four Cardinal Coordinates

A call option is an option contract in which the holder (buyer) has the right (but not the obligation) to buy a specified quantity of a security at a specified price (strike price) .

Most importantly, options can allow you to put the odds in your favor. If using options for speculation doesn't fit your style, no problem — you can use options without speculating. Even if you decide never to use options, it is still important to understand how companies you invest in use them. For instance, they might hedge foreign-exchange risk, or give employees potential stock ownership in the form of stock options.

Most multi-national corporations today use options in some form or another. This tutorial will introduce you to the fundamentals of stock options. The concepts can be broadly applied to assets other than stocks, too. Many options traders have years of experience, so don't expect to be an expert immediately after reading this tutorial. Call and Put Options Options Basics: How Options Work Options Basics: Types of Options Options Basics: Options Spreads Options Basics: Options Risks Options Basics: The best way to think about options is this: This is why, when trading options with a broker, you usually see a disclaimer similar to the following: Gain a thorough understanding of factors that affect price and how it is essential in options trading.

Learn the top three risks and how they can affect you on either side of an options trade. Learn how to invest in Google now Alphabet, Inc. Find out four simple ways to profit from call and put options strategies. Go Now Clear List. Calls "Calls" is an option that gives the holder the right to buy the underlying asset. Last "Last Sale" is the most recent trade. Chg "Change" is the difference between a day's last trade and the previous day's last trade.

Bid "Bid" is the price a potential buyer is willing to pay for a security. Sometimes also used in the contect of takeovers where one corporation is bidding for trying to buy another corporation.

In trading, we have the bid-ask spread which is the difference between what buyers are willing to pay and what sellers are asking for in terms of price.

Ask "Ask" is the quoted ask, or the lowest price an investor will accept to sell a stock. Practically speaking, this is the quoted offer at which an investor can buy shares of stock; also called the offer price.

Vol "Volume" is the daily number of shares of a security that change hands between a buyer and a seller. Also known as volume traded. Open Int "Open Interest" is the total number of derivatives contracts traded that have not yet been liquidated either by an offsetting derivative transaction or by delivery. Root Strike "Strike" is the index value at which the buyer of the option can buy or sell the underlying stock index.

The strike index is converted to a dollar value by multiplying by the option's contract multiple. Puts "Put" is an option granting the right to sell the underlying futures contract. Opposite of a call. Sep 28, 0 0 MET CLOSE X Please disable your ad blocker or update your settings to ensure that javascript and cookies are enabled , so that we can continue to provide you with the first-rate market news and data you've come to expect from us.