Options Flashcards
Understand Puts and Calls (25 cards)
One contract equals how many shares?
100 shares
Option buyers get a ________?
Right
Option sellers have an ___________?
Obligation
Call option buyers get a right to: (1) Buy a stock? or (2) Sell a stock?
Buy a stock
Put option buyers get a right to: (1) Buy a stock? or (2) Sell a stock?
Sell a stock
PUT option sellers have an obligation to: (1) Buy a stock? or (2) Sell a stock?
Buy a stock. The buyer gets to “put” a stock to the seller
CALL option sellers have an obligation to: (1) Buy a stock? or (2) Sell a stock?
Sell a stock. The buyer gets to “call” the stock.
The agreed price for an option is called what?
The STRIKE price
When does the option expire?
On the EXPIRATION date.
When must an option the exercised?
On or before the expiration date.
If you Sell a PUT, you are saying “Hey, you and PUT your stock to me”
So you have an obligation to buy
If you Sell a CALL, you are saying “You can CALL my stock from me”
So you have an obligation to sell
Strike Price
The price you pay of get to do a contract, per share
Expiration
The date at which the contract ends
Premium
The amount you pay or get
Bid
Is for sellers
Ask
Is for buyers
Volume
The contracts made today
Open interest
The total contracts made that are still open
Liquidity
Is the ability to easily get out of the contract It comes from significant volume and interest
Stock price
The amount the stock is trading for, per share
ATM At The Money
When the strike price is the same as the stock price
OTM Out Of The Money
The strike price is not exercisable by the buyer: PUT Options - The stock price will be above the Strike price CALL Options - The stock price will be below the strike price
ITM In The Money
The Strike price is exercisable by the buyer. PUT options - Stock price is below Strike price CALL options - Stock price is above Strike price
