What Are Stock Options?

If you are interested in the exciting world of stock option trading, you should be familiar with stock option trading strategies. This term refers to a limited time contract between buyer and seller. The contract stipulates that the buyer can purchase the specified stock but is not required to, and that the seller must sell the specified stock at the agreed upon price. Of course once the contract expires this agreement is no longer valid. Options trading is nothing new, it is estimated that the first form of options trading took place around 7 BC in Greece, but instead of stocks the commodity was olives.

There are particular ways to define options trading. One is the date of expiration. This is when the contract ends. The option is based on an underlying asset. Then there is the exercise price, also called the strike price. This is the amount for which the asset is purchased or sold if the holder of the option chooses to do so. There is a difference between options in the United States and Europe. In the United States, the buying or selling can happen at any time period during the contract period. In Europe, the option can only be exercised on the date of expiration.

You may hear the term ATM tossed around. This is not an automatic teller machine, at least not in the world of stock trading. This acronym stands for at-the-money, which means the strike price is very close or identical to the current price. Then there is the acronym OTM, or out-of-the-money. This means the price is too far from the strike amount therefore there is no good reason for the options holder to take action on the contract. Finally an ITM, which means in-the-money, is a position that is profitable for the contract holder.

As you can see, stock options allow traders the potential of profit without a lot of risk. Even those new to stock trading can delve into options trading with a little knowledge. There are a plethora of books, newspapers, magazines and even educational courses which can teach even the most clueless individual how to trade. Before you do decide to invest money, make sure you are well schooled in trading. Also, it is a good rule of thumb to never use money you can't afford to lose. That way if you lose money it may be disappointing but not devastating.

 

 

trading stock options

 

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Stock Options Online News:

 

TradeKing and Zecco Announce Agreement to Merge - MarketWatch (press release)

TradeKing and Zecco Announce Agreement to Merge
MarketWatch (press release)
TradeKing ( www.tradeking.com ) is a nationally licensed online stock and options broker offering simple, low cost online trading fees.(1) A pioneer in integrating new financial social media as part of its innovative online equities, options trading .

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Technical problems disrupt Euronext trading in Amsterdam
Online trading in options and futures at NYSE Euronext in Amsterdam was disrupted for hours on Monday morning due to unspecified "technical problems," the stock exchange said...


IB Options Brief: Goldman Sachs Group, Inc. (GS) - The Options Insider

IB Options Brief: Goldman Sachs Group, Inc. (GS)
The Options Insider
Shares in Goldman Sachs are back above $100.00 this morning after closing below that level on Monday and Tuesday, the stock's first run-ins with double-digit prices since January. Sharp 38.0% gains in the stock in the first quarter of 2012 evaporated .

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Hot Option Plays: Watch The Claims Data Tomorrow - Daily Markets

Hot Option Plays: Watch The Claims Data Tomorrow
Daily Markets
Although stock market averages had moved modestly higher into midday with help from economic data, selling pressure resurfaced in the second half of trading Wednesday. Data released early showed Housing Starts up to an annual rate of 717000 in April, .

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Executive pay: Is the Columnist worth it? Just ask his dog - Mid Columbia Tri City Herald

Executive pay: Is the Columnist worth it? Just ask his dog
Mid Columbia Tri City Herald
To promote retention and align Columnist's interests more closely with those of stockholders (like that's going to happen), the Committee grants long-term equity compensation, generally consisting of a mix of stock options and restricted stock units.

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Merriman Holdings, Inc. Announces Financial Results for the First Quarter . - MarketWatch (press release)

Merriman Holdings, Inc. Announces Financial Results for the First Quarter .
MarketWatch (press release)
While we did see a significant charge of $1.7 million for stock based compensation expense during the quarter, this was mainly attributed to a onetime cleanup charge of option forfeitures and other non-recurring items. We are working hard to align our .

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Executive pay: Is the Columnist worth it? Just ask his dog - Sacramento Bee

Executive pay: Is the Columnist worth it? Just ask his dog
Sacramento Bee
To promote retention and align Columnist's interests more closely with those of stockholders (like that's going to happen), the Committee grants long-term equity compensation, generally consisting of a mix of stock options and restricted stock units.

and more »
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stock options trading

 

Discover Hot To Trade Stock Options - Click Here

 

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