Put option contracts size

If you are new to trading options, familiarity with the language and terms used is important for your future learning.

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The seller of a call option may be obligated to fulfill the terms of the contract and SELL the underlying asset stock at a specific price in exchange for the premium they have received.

What is a Put Option? Put options are contracts which give the put buyer the right to SELL the stock at a specific stock price any time before a predetermined date.

If the put buyer does not exercise his right to sell the stock before the predetermined time, the option contract will expire and the opportunity to sell the option will cease to exist. The seller of a put option may be obligated to fulfill the obligations of the contract and BUY stock at a specific stock price in exchange for the payment they have received. Strike Price The predetermined price at which the owner of an option can purchase call or sell put the underlying stock.

Sometimes strike price is called the exercise price. Stock options have multiple strike prices listed for trading to allow buyers and sellers to choose which price levels in the stock they can buy or sell an option. Expiration Date The date that an option and the right to exercise it will cease to exist.

Why Trade Options?

Typically, the expiration date falls on the third Friday of each month for monthly options. Many stocks have options which are called weekly options and have expiration dates each Friday. The expiration date is also the last trading day for the option in most equity stock options. If the Friday is an exchange holiday, the expiration date will occur on the preceding Thursday.

The expiration date is December, so it is a monthly option which expires on the 3rd Friday of the month in December. In-the-money ITM The call option is considered in-the-money ITM if the current price for the stock is higher than the strike exercise price of the option. The put option is in-the-money ITM if the current price of the stock is below the strike exercise price of the option Out-of-the-money OTM The call option is out-of-the-money OTM if the stock is below the strike exercise price of the option.

The put option is out-of-the-money OTM if the stock is above the strike exercise price of the option. Intrinsic value is the amount that the option is in-the-money ITM. Time value or extra extrinsic value is the difference between the total premium of the option and the intrinsic value if any of the option.

Volatility Value The time value is sometimes referred to as the volatility value of the option. Exercise Long holders of options hold the right to exercise the terms of the contract purchased. For a long call, the call option owner buys the underlying stock.

For a long put, the put owner sells the underlying stock. In each case, the price of the stock purchased or sold is at the exercise strike price. Assignment Notification to an option seller that a long holder of an option has exercised their rights, and they have been randomly selected to fulfill their obligation of the contract they have sold. In the case of a short call option, the seller who is assigned must sell the stock at the exercise strike price.

For a short put option, the seller must buy the stock at the exercise strike price. Sell to Close It is especially important to understand that if you are long an option you can sell to close that option at any time prior to the expiration date of the option contract.

Just because the option has an expiration date associated with it that does not mean you have to retain the option position until that date. Buy to Close For option sellers, if you are short an option, you can buy to close the option at any time prior to the expiration date.

Ask Price As with any listed security, there exists a bid and ask price for options. The bid represents the current highest price where a buyer is willing to purchase a given option contract.

The ask represents the lowest price at which a seller would be willing to sell the same option contract.

The ask price is also known as the offer. The bid and ask prices are shown on the option chain. Bid Size Ask Size The bid size and ask size shown on the option chain shows the current number of contracts currently bid or offered at the NBBO. The N ational consolidated B est highest bid price and B est lowest O ffer price.

Option Chain View of the options prices for a specific stock or ETF.

The expiration dates listed are horizontally displayed above the column headings. You can see below the Oct15 and Dec15 monthly options are displayed. Since I began this series on discussing strategies which take some investment chips off the….

Consolidated Tax Forms are now available in both OptionsHouse platforms. To access your …. The above information is provided by OptionsHouse for informational and educational purposes only and is not intended as trading or investment advice or a recommendation that any particular security, transaction, or investment strategy is suitable for any specific person.

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OptionsHouse does not provide investment, tax or legal advice. Options and futures transactions involve risk and are not suitable for all investors. Electronic trading poses unique risk to investors. System response and access times may vary due to market conditions, system performance and other factors. An investor should understand these and additional risks before trading.

Securities and futures products and services offered by OptionsHouse. Member FINRA SIPC NFA. Log in Open an Account. Basic Option Terminology September 22, Steve Claussen Trading Strategies If you are new to trading options, familiarity with the language and terms used is important for your future learning. What is an Option? An option is simply a contract between buyer and seller which derives its value from an underlying asset.

For equity options, stock is the underlying asset in a stock or an exchange traded fund ETF. Option Buyer The buyer owner or holder of the contract pays a premium payment and holds the right to either buy or sell the asset stock at a predetermined price and within a predetermined time frame. It is important to note that the owner of an option contract has a right to buy and not an obligation.

Option buyers are considered LONG the option. Option Seller The seller writer of the contract receives a premium payment in exchange for assuming an obligation to fulfill the requirements of the contract to buy or sell the underlying asset stock at a predetermined price for a predetermined time. It is important to note here that sellers of options have received a payment and have obligations to potentially fulfill the terms of the contracts. Option sellers are considered SHORT the option.

Listed stock option contracts control the right to buy or sell shares of the underlying stock asset. What is a Call Option? Call options are contracts which give the call buyer the right to BUY the underlying asset stock at a specific stock price. If the call buyer does not exercise his right to buy the stock before the predetermined time, the option contract will expire and the opportunity to exercise the right to buy will cease to exist.

Many additional strike prices are available as well as many additional column choices. OptionsHouse puts the trader in charge of the trading experience.

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About OptionsHouse About Us Press Releases Awards Careers Affiliate Program. Customer Service Frequently Asked Questions — FAQs Live Chat Live Chat Offline Customer service is available Monday — Friday, 8 a. The buyer owner or holder of the contract pays a premium payment and holds the right to either buy or sell the asset stock at a predetermined price and within a predetermined time frame. The seller writer of the contract receives a premium payment in exchange for assuming an obligation to fulfill the requirements of the contract to buy or sell the underlying asset stock at a predetermined price for a predetermined time.

There are two types of option contracts: The predetermined price at which the owner of an option can purchase call or sell put the underlying stock. The date that an option and the right to exercise it will cease to exist. The call option is considered in-the-money ITM if the current price for the stock is higher than the strike exercise price of the option.

The put option is in-the-money ITM if the current price of the stock is below the strike exercise price of the option. The call option is out-of-the-money OTM if the stock is below the strike exercise price of the option. Long holders of options hold the right to exercise the terms of the contract purchased. Notification to an option seller that a long holder of an option has exercised their rights, and they have been randomly selected to fulfill their obligation of the contract they have sold.

It is especially important to understand that if you are long an option you can sell to close that option at any time prior to the expiration date of the option contract. For option sellers, if you are short an option, you can buy to close the option at any time prior to the expiration date. As with any listed security, there exists a bid and ask price for options. The bid size and ask size shown on the option chain shows the current number of contracts currently bid or offered at the NBBO.

View of the options prices for a specific stock or ETF.