Introduction Of Options Trading Camillus 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. Mark Colvin, CFP®
(315)701-2983
5750 Commons Park Dr
East Syracuse, NY
Mr. Cole Henderson, CFP®
(315)448-3325
7222 Chadwick Circle
Jamesville, NY
BRIAN FOSTER, CFP®
(315)451-5885
4769 BUCKLEY ROAD
Liverpool, NY
Mr. John Martin, CFP®
(315)699-5113
221 S. Warren Street
Syracuse, NY
Anthony Farella
Rockbridge Investment Management, LLC

(315) 671-0588 X222
101 South Salina Street, Suite 400
Syracuse, NY
Mr. Troy Sebeck, CFP®
607-772-3445
102 Niblick Circle
Baldwinsville, NY
Mr. Peter Derrenbacker, CFP®
315-434-8800
6314 Fly Rd
East Syracuse, NY
Mr. Frank Arkinson, CFP®
(315)446-7229
6109 Waitsfield Dr N
Jamesville, NY
Mr. David Walker, CFP®
(315)425-6373
680 Crow Hill Rd.
Skaneateles, NY
Mr. Kevin Riley, CFP®
(315)422-7096
231 Walton St
Syracuse, NY
Data Provided by:
    

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.

Related Articles
- Trading Stock Options Camillus NY
The 2008 recession and stock market crash is the worst financial and economic crisis since the great depression. Without doubt, this stock market crash has rendered many traders and investors helpless in search for profit.
- Forex Trading Advice Camillus NY
- Forex Trading Success Camillus NY
- Mechanical Forex Trading Profits Camillus NY
- Forex Day Trading Strategies Camillus NY
- Leaning Forex Trading Online Camillus NY
- Forex Trading Education Program Camillus NY
- Forex Education Camillus NY
- How to Use Stop Losses in Swing Trading Camillus NY
- Day Trading for a Living Camillus NY