Introduction Of Options Trading Binghamton NY

There are two types of option contracts Call options and Put options. A Call option gives the buyer the right to buy the underlying asset, while a Put option gives the buyer the right to sell the underlying asset.

Local Companies

Mr. Paul Benesch, CFP®
(607)648-8574
20 Clyde Gruver Rd
Binghamton, NY
Ms. Cynthia Elinoff, CFP®
(607)748-6334
409 Hooper Rd
Endwell, NY
Ms. Maria Guzzetta, CFP®
607-656-8550
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Greene, NY
Harold Sasnowitz
Professional Asset Strategies, LLC

(607) 238-7718
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Binghamton, NY
Peyton Hawkes
Hawkes Fee Only Advisors

(607) 773-8055
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Binghamton, NY
Mr. Daniel Johnson, CFP®
607-625-3903
1001 Pennsylvania Ave
Apalachin, NY
Mr. Frank Lucia, CFP®
(607)238-1822
2607 Daren Dr
Endicott, NY
Mr. Ronald Williamson, CFP®
(607)238-7354
218 Hastings Ave
Endwell, NY
Ms. Susan Doolittle, CFP®
607-785-6097
413 E Benita Blvd
Vestal, NY
Cynthia Elinoff
CSE Capital Management

(607) 748-6334
409 Hooper Road
Endwell, NY
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An option contract is an agreement between two parties to buy/sell an asset (In this case, the asset refers to stock) at a certain price and specific date.

It is called an option because the buyer is not obliged to carry out the transaction. If, over the life of the contract, the asset value decreases, the buyer can simply elect not to exercise his/her right to buy/sell the asset.

There are two types of option contracts Call options and Put options. A Call option gives the buyer the right to buy the underlying asset, while a Put option gives the buyer the right to sell the underlying asset.

A simple example: Peter buys a Call option contract from Sarah. The contract states that Peter will buy 100 Microsoft shares from Sarah on the 5th May for $25. The current share price for Microsoft is $30.

Note: this is an example of a Call option as it gives Peter the right to buy the underlying asset.
If the share price of Microsoft is trading above $25 on the 5th May, then Peter will exercise the option and Sarah will have to sell him Microsoft shares for $25. With Microsoft trading anywhere above $25 Peter can make an instant profit by taking the shares from Sarah at the agreed price of $25 and then selling the shares on the open market for whatever the current share price is and making a profit.

The $25 value, which is stated in the agreement, is referred to as the Exercise (or Strike) Price. This is the price at which the asset will be exchanged.
The date (in this case 5th May) is known as the Expiry (or Maturity) Date. This date is the deadline for the option contract. At this date, the option buyer is to decide if a transaction of the underlying asset is to occur.

Outcomes: Let s imagine that at the expiration date, Microsoft is trading at $30, then Peter will buy the shares from Sarah at the agreed $25 and then he can sell them back on the open market for $30 and make an instant $5.

Alternatively, if Microsoft is trading at $20, then buying the shares from Sarah at $25 is too expensive as he can buy them on the open market for $20 and save $5. In this situation, Peter would choose not to exercise his right to buy the shares and let the options contract expire worthless. His only loss would be the amount that he paid to Sarah when he bought the contract, which is called the Option Premium more on that a little later. Sarah would, however, keep the option premium received from Peter as her profit.

All in all, there are more than 50 strategies you can deploy in options trading by combining many different strike prices and expiration. But do you need to know all?

The good news is you do not have to!In fact, most of them allow you to make money very slowly or limited.