Introduction Of Options Trading Yonkers 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
Cheryl Costa
AFW Wealth Advisors

(914) 696-5300 Ext: 210
3020 Westchester Avenue
Purchase, NY
Joyce Streithorst
Frisch Financial Group, Inc.

212-983-8444
100 Park Avenue, Suite 1600
New York, NY
John Henry Low
Knickerbocker Advisors Inc.

(212) 717-8080
230 Park Avenue, Suite 456
New York, NY
Darin Schnall
Schnall Advisory Services

(212) 967-6155
350 Fifth Avenue, Suite 3505
New York, NY
Martin Shenkman
Martin M. Shenkman, PC

(201) 845-8400
4 Forest Avenue, 2nd Floor
Paramus, NJ
Anthony DeVito
ADV Investment Management & Financial Planning

(800) 732-5031
60 East 42nd Street
New York, NY
Lili Vasileff
Divorce and Money Matters, LLC

(203) 393-7200
Two Sound View Drive
Greenwich, CT
Kathryn Norris
Asset Strategies, Inc.

(800) 245-2752
350 West 50th Street
New York, NY
Gary Schatsky
IFC Personal Money Manager, Inc.

(212) 721-8713
250 West 57th Street, Suite 1619
New York, 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 Yonkers 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.
- Mechanical Forex Trading Profits Yonkers NY
- Day Trading for a Living Yonkers NY
- Forex Education Yonkers NY
- How to Use Stop Losses in Swing Trading Yonkers NY
- Trading Stock Options Yonkers NY
- Forex Trading Advice Yonkers NY
- Forex Trading Success Yonkers NY
- Forex Trading Education Program Yonkers NY
- Forex Day Trading Strategies Yonkers NY