Hey there,
Heres a quick video on the basics of options
Options I advise all stock market traders to get into. At first, beginners learning options can be extremely confused by the many concepts and terms that they have. The very basics of options are actually very simple, and easy to learn for the most basic beginner. You can start with doing call and put options as a beginner.
The video goes over what options are, the terminology you should know, as well as what calls and puts are. However, there is a lot more to learn about options from there.
What are Options
- An option is a contract between a buyer and a seller. The seller of the option is the writer of the contract, while the buyer of an option is the contract holder. An option is known as a financial derivative because it is derived from another value, like the share price.
Terminology
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Expiration: The day the contract of the option is exercised or expires worthless.
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Strike price: The price the stock has to reach to have the option contract be exercised on or before expiration.
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Premium: The amount a buyer of a contract pays for the contract.
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Contract: 100 shares of stock.
Calls and Puts
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A call option is buying the right to purchase a stock at the strike price by expiration. If the current stock price does not reach the strike price by expiration, the contract expires worthless and you lose your premium. If the current stock price does reach the strike by expiration, the contract is exercised and you are liable to buy 100 shares per contract at the strike price.
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A put option is buying the right to sell. A buyer of a put option contract pays a premium for the seller of the contract to be liable to purchase their 100 shares per contract if a current stock price ever drops below the strike price. If the current stock price does not fall below the strike price by expiration, the contract expires worthless.
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The video goes over selling calls and puts. This is where you receive the premium and are liable to either sell 100 shares per contract (call) or buy 100 shares per contract (put) at the strike price by the expiration date.
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There is still a lot to learn about options, like what determines premium price.
Hope this is a decent resource for the very beginner options traders to get started learning about the very versatile tool of options.
Submitted April 20, 2017 at 11:50AM by Noqt http://ift.tt/2pH1Ckf
