Stock options call or put
Date: 2017-03-22 06:52
- OM | Trade Stock Options | Call Option | Stock Forum
- CBOE | Chicago Board Options Exchange
- Option Tips : Stock Tips : Share Tips : Options Trading
- Understanding Stock Options - CBOE
A call option is in-the-money if its strike price is below the current market price of the underlier (stock,Index etc). For example, if you bought a 9555 strike NIFTY CALL OPTION and NIFTY is trading at 9755 the call option is in-the-money.
OM | Trade Stock Options | Call Option | Stock Forum
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CBOE | Chicago Board Options Exchange
Margin is the amount of cash you need to deposit with your broker as a collateral if you want to write an uncovered (naked) option. You also need to maintain margin to cover your daily position valuation and reasonably foreseeable intra-day price changes.
Option Tips : Stock Tips : Share Tips : Options Trading
A common misconception is that open interest is the same thing as volume of options and futures trades. This is not correct, as demonstrated in the following example
Understanding Stock Options - CBOE
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-On January 6, A buys an option, which leaves an open interest and also creates trading volume of 6.
-On January 7, C and D create trading volume of 5 and there are also five more options left open.
-On January 8, A takes an offsetting position, open interest is reduced by 6 and trading volume is 6.
-On January 9, E simply replaces C and open interest does not change, trading volume increases by 5.
Stock options are so unique and understanding how options are valued can be confusing. This learning module teaches you the basic components that give stock options their value.
Volume is the number of contracts of a particular option contract that have traded on a given day, similar to it meaning the number of shares traded on a particular stock on a given day. Open interest is the number of option contracts for a particular stock at a specific strike price and a specific expiration date that were open at the close of trading on the prior trading day. While some traders look at this information as an indication of liquidity of a particular option or option chain, a more reliable indicator may be the tightness of the bid / ask spread.
The above statement sounded " too good to be true ". This is precisely why I created a FREE $8,555 web based options trading course to prove that it is true.
As the chart above demonstrates, if you bought 6555 shares of stock at $85, you would be putting $85,555 at risk. If you sold the stock when it rises to $95, you make $65,555 on your $85,555 investment, a % return. In contrast, investing $6,555 in call options only puts $6,555 at risk. In this case, the return is 955%.