Options Explained by BetterTrades

What are Stock Options?

• An option is a contract that gives the buyer the right, but not the obligation, to buy a stock at specific date at a specific price.

BetterTrades Options Trading Classes

• BetterTrades is the leader in Stock Option Education, offering options trading classes for all skill levels

• Enroll in a free class offered by BetterTrades

How Options are different from Stocks?

• Stocks trade in shares whereas Options trade in contracts, where each contract controls 100 shares of stock.

• Stocks don't expire whereas Options are time sensitive and expire on the third Friday of the month.

Types of Options: Calls and Puts

• Calls - Buying a call gives you the right, but not the obligation to buy the stock at a certain time (the expiration date) at a certain price (the strike price).

• Puts - Buying a put gives you the right, but not the obligation to sell the stock at a certain time (the expiration date) at a certain price (the strike price).

American Options vs. European Options

• American options can be exercised anytime between the date of purchase and the expiration date.

• European options may only be redeemed at the expiration date. Most exchange-traded stock options are American.

What is an Option Chain?

• An Option Chain is a way of quoting options prices through a list of all of the options for a given security, such as stocks or currency.

• For each underlying security, the option chaintells investors the various strike prices, expiration dates, and whether they are calls or puts.

Option Chain

What is the Strike Price?

• The fixed price at which a specific option contract can be exercised.

• For call options, the strike price is where the security can be bought (up to the expiration date).

• For put options the strike price is the price at which shares can be sold.

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