Introduction Of Options Trading Flushing 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

Gerard Barrasso
United Financial Planning Group, LLC

631-234-0871
1979 Marcus Avenue
Lake Success, NY
Joel Isaacson
Joel Isaacson & Co., LLC

(212) 302-6300
546 Fifth Avenue, 20th Floor
New York, NY
Cary Carbonaro
Stonegate Wealth Management, LLC

201 791 0085
11 Penn Plaza
New York City, NY
Victoria Marrone
Modera Wealth Management, LLC

(201) 768-4600
56 Jefferson Avenue, Second Floor
Westwood, NJ
Victor Cannillo
Baron Financial Group, LLC

(866) FEE-ONLY (333-6659)
16-00 Route 208 South
Fair Lawn, NJ
V. Peter Traphagen
Traphagen Investment Advisors, LLC

(201) 262-1040
234 Kinderkamack Road
Oradell, NJ
David Frisch
Frisch Financial Group, Inc.

212-983-8444
100 Park Avenue, Suite 1600
New York, NY
Anthony DeVito
ADV Investment Management & Financial Planning

(800) 732-5031
60 East 42nd Street
New York, NY
Robert Dowling
Modera Wealth Management, LLC

(201) 768-4600
56 Jefferson Avenue, Second Floor
Westwood, NJ
James Shagawat
Baron Financial Group, LLC

866-FEE-ONLY (333-6659)
Midtown
New York City, 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
- Leaning Forex Trading Online Flushing NY
Getting enough background when it comes to the complexes of foreign exchange will help you earn more from your investment. While you have the desire to learn forex trading online, you are faced with several challenges as well.
- Trading Stock Options Flushing NY
- Mechanical Forex Trading Profits Flushing NY
- Forex Trading Education Program Flushing NY
- Forex Day Trading Strategies Flushing NY
- Forex Education Flushing NY
- Forex Trading Advice Flushing NY
- Day Trading for a Living Flushing NY
- How to Use Stop Losses in Swing Trading Flushing NY
- Forex Trading Success Flushing NY