Stock Options Explained:
Stock options are agreements between a buyer and a seller. The buyer pays a fee called the premium to get the right, but not the obligation, to buy or sell a specific stock at a certain price (strike price) by a certain time (expiration date).
There are two main types of options contracts: calls and puts.
• Calls: These give the buyer the right to buy a stock at a certain price (strike price) by a certain time (expiration date). The seller must sell the stock to the buyer if they exercise the option. • Puts: These give the buyer the right to sell a stock at a certain price (strike price) by a certain time (expiration date). The seller must buy the stock from the buyer if they exercise the option.
Here are some key terms to understand stock options:
• Strike Price: This is the predetermined price at which the option can be exercised (bought or sold). • Premium: The fee the buyer pays the seller for the option contract. • In the Money: An option is considered "in the money" if it would be profitable to exercise it right now. For a call option, this means the stock price is higher than the strike price. For a put option, it means the stock price is lower than the strike price. • At the Money: An option is considered "at the money" if the stock price is exactly equal to the strike price. • Out of the Money: An option is considered "out of the money" if it would not be profitable to exercise it right now. For a call option, this means the stock price is lower than the strike price. For a put option, it means the stock price is higher than the strike price. • Expiration Date: This is the last day the option can be exercised. Options contracts that are not exercised by the expiration date expire and become worthless.
Trading Hours
9:30 am-16:00 pm ET every trading day until the option is set to expire.
Options are complex financial products. As such, you must ensure you have read and understood our Standard Client Agreement, Target Market Determination, Product Disclosure Statement, and Characteristics and Risks of Standardised Options. For more information, please refer to Terms and Conditions | 