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