Options Flashcards
Buyers - Calls
Have the right to buy
Want the stock price to go up
Bullish
Buyers - Puts
Have the right to sell
Want stock price to fall
Bearish
Sellers - Calls
Have the obligation to sell
Want stock price to fall
Bearish
Sellers - Puts
Have the obligation to buy
Want stock price to rise
Bullish
What Does each part of this order this mean:
BUY 1 XYZ JUNE 50 CALL @ 7
- Action to be taken
- # of contracts (100 shares per contract)
- Security Name
- Expiration Month
- Stroke Price
- type of options call or put
- premium per share
Calls - in the money
Stock price is higher than the strike price
Calls - at the money
Stock price is equal to the strike price
Calls - out the money
Stock price Less than Strike Price
Puts - in the money
Stock Price is lower than the strike price
Puts - at the money
Stock price is equal to the strike price
Puts - out the money
Stock price higher than the strike price
Intrinsic Value
The in the money amount
Time Value
The amount by which the premium exceeds the intrinsic value