| Stock options are important investments | | | | option contracts. Investors who sell |
| to consider when you are building wealth | | | | puts or calls have the obligation to |
| in the stock market. The most basic | | | | exercise their options contracts. |
| definition for a stock option is a | | | | The price of a stock option must go |
| contract that allows an investor to | | | | above the strike price for investors to |
| purchase or sell a specified stock at a | | | | exercise and make a profit on call |
| specified price, within a specified | | | | options and the price must go below the |
| amount of time. Employers commonly give | | | | strike price for investors to make a |
| stock options as asset based | | | | profit on put options. When options fall |
| compensation, and investors buy and sell | | | | into these ranges, they are called "in |
| options on the stock market to gain | | | | the money". |
| capital. Every stock option is | | | | Options can be used for a wide range of |
| characterized by the name of the stock, | | | | trading scenarios, such as: |
| the strike price, the option contract | | | | -Reducing your risk from stock ownership |
| expiration date and the price that was | | | | -Generating an income from stock you |
| paid for the contract. | | | | already hold |
| Basic Terms: | | | | -Speculative trading in an up or down |
| Call Options- these give the owner the | | | | market |
| right to buy a stock at a specified | | | | -Multi leg option strategies to take |
| price, within a specified amount of | | | | advantage of specific market action |
| time. Investors who buy call options are | | | | -Volatility based strategies to take |
| hoping that the stock value increases | | | | advantage of market volatility even if |
| before the option expiration date. | | | | you do not know which way the market |
| Put Options- these give the owner the | | | | will go. |
| right to sell a stock at a specified | | | | While is it true that options take some |
| price, within a specified amount of | | | | time to understand and to master, most |
| time. Investors who buy put options are | | | | people agree that once they have spent |
| hoping that the stock value decreases | | | | the time to properly educate themselves |
| before the option expiration date. | | | | about options, that they are much better |
| Strike Price- the price that the option | | | | off for doing so. |
| can be bought or sold at. | | | | Many stock traders I know, once learning |
| Options Investor Types: Buyers of Call | | | | about options have never traded a single |
| Options, Sellers of Call Options, Buyers | | | | stock again. They can make more money, |
| of Put Options, Sellers of Put Options | | | | and take less risk by using a properly |
| There is an important difference between | | | | structured option strategy. |
| the investors who buy and investors who | | | | So if anyone is still on the fence, it's |
| sell options. Investors who buy puts and | | | | definitely worth taking the time to |
| calls have the choice to exercise their | | | | learn about options. |