Options Basics: What Are Options? - Investopedia
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The price at which an underlying stock can be purchased or sold is called the strike price . This is the price a stock price must go above (for calls) or go below (for puts) before a position can be exercised for a profit. All of this must occur before the expiration date . In our example above, the strike price for the S&P 500 put option was 2250.
But apart from that, how will options trading benefit a stock trader compared to buying the actual share? This part is quite easy. Let’s assume this trader purchased an option to buy 100 shares of Company X for $21 three months from now.
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Unsure what you’re looking for? See how to choose an options broker for more on what can make or break an options trading experience.
Before you begin trading options, you should know what exactly is a stock option and understand the two basic types of option contracts - puts and calls. Learn how they work and how to trade them for profits.... [Read more...]
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