Introduction Of Options Trading Endicott 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

Ms. Rebecca Rockoff, CFP®
(607)237-2163
47-49 Front St
Binghamton, NY
Mr. Robert Kline, CFP®
(607)754-7222
1405 Davis Ave
Endwell, NY
Mr. Edward Yetsko, CFP®
(607)754-1411
825 Vestal Pkwy W
Vestal, NY
Harold Sasnowitz
Professional Asset Strategies, LLC

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

(607) 773-8055
721 Chenango Street
Binghamton, NY
Mr. Anthony O'Connor, CFP®
607-797-6314
22C Riverside Dr
Binghamton, NY
Mr. John Moses, CFP®
607-770-6418
3633 Turner Dr.
Endwell, NY
Ms. Anne Catalano, CFP®
(607)785-4363
1250 Vestal Pkwy E
Vestal, NY
Mr. Jonathon Myers, CFP®
(607)754-8126
1550 Vestal Parkway East, Suite B
Vestal, NY
Cynthia Elinoff
CSE Capital Management

(607) 748-6334
409 Hooper Road
Endwell, 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
- Mechanical Forex Trading Profits Endicott NY
Most novice Forex traders want to make money using mechanical Forex trading systems but most lose money, as most systems lose. This article is all about finding the right system and trading it for long term currency trading success.
- Forex Trading Advice Endicott NY
- Forex Education Endicott NY
- Trading Stock Options Endicott NY
- Forex Day Trading Strategies Endicott NY
- Day Trading for a Living Endicott NY
- How to Use Stop Losses in Swing Trading Endicott NY
- Forex Trading Education Program Endicott NY
- Leaning Forex Trading Online Endicott NY
- Forex Trading Success Endicott NY