Options Basics: Conclusion
AAA
  1. Options Basics: Introduction
  2. Options Basics: What Are Options?
  3. Options Basics: Why Use Options?
  4. Options Basics: How Options Work
  5. Options Basics: Types Of Options
  6. Options Basics: How To Read An Options Table
  7. Options Basics: Conclusion

Options Basics: Conclusion

We hope this tutorial has given you some insight into the world of options. Once again, we must emphasize that options aren't for all investors. Options are sophisticated trading tools that can be dangerous if you don't educate yourself before using them. Please use this tutorial as it was intended - as a starting point to learning more about options.

Let's recap:

  • An option is a contract giving the buyer the right but not the obligation to buy or sell an underlying asset at a specific price on or before a certain date.
  • Options are derivatives because they derive their value from an underlying asset.
  • A call gives the holder the right to buy an asset at a certain price within a specific period of time.
  • A put gives the holder the right to sell an asset at a certain price within a specific period of time.
  • There are four types of participants in options markets: buyers of calls, sellers of calls, buyers of puts, and sellers of puts.
  • Buyers are often referred to as holders and sellers are also referred to as writers.
  • The price at which an underlying stock can be purchased or sold is called the strike price.
  • The total cost of an option is called the premium, which is determined by factors including the stock price, strike price and time remaining until expiration.
  • A stock option contract represents 100 shares of the underlying stock.
  • Investors use options both to speculate and hedge risk.
  • Employee stock options are different from listed options because they are a contract between the company and the holder. (Employee stock options do not involve any third parties.)
  • The two main classifications of options are American and European.
  • Long term options are known as LEAPS.

  1. Options Basics: Introduction
  2. Options Basics: What Are Options?
  3. Options Basics: Why Use Options?
  4. Options Basics: How Options Work
  5. Options Basics: Types Of Options
  6. Options Basics: How To Read An Options Table
  7. Options Basics: Conclusion
RELATED TERMS
  1. Bid Wanted

    An announcement by an investor who holds a security that he or ...
  2. Multibank Holding Company

    A company that owns or controls two or more banks. Mutlibank ...
  3. Short Put

    A type of strategy regarding a put option, which is a contract ...
  4. Wingspread

    To maximize potential returns for certain levels of risk (while ...
  5. Volatility Smile

    A u-shaped pattern that develops when an option’s implied volatility ...
  6. Nadex

    Nadex stands for the North American Derivatives Exchange, a regulated ...
  1. What happens to my annuity after I die?

    Understand the different types of annuity payment plans and what payments or additional benefits are payable to your beneficiaries ...
  2. What is the first day of the quarter?

    Learn when the first day of the quarter is. Explore why investors and analysts prefer to compare results year-over-year due ...
  3. What is the difference between a quarter and a year in finance?

    Examine the difference between a fiscal quarter and a fiscal year. Learn why investors examine both quarterly and annual ...
  4. What is a quarterly report?

    Learn about quarterly reports and why they are important to investors. Explore street consensus estimates and how reported ...

You May Also Like

Related Tutorials
  1. Bonds & Fixed Income

    Investing For Safety and Income Tutorial

  2. Economics

    American Depositary Receipt Basics

  3. Investing Basics

    Stock Basics Tutorial

  4. Options & Futures

    Binary Options Tutorial

  5. The New York Stock Exchange
    Mutual Funds & ETFs

    Top ETFs And What They Track: A Tutorial

Trading Center