Trade in Groups

Option trading is more complicated than trading stock. When you buy an option, you are purchasing the right to buy or sell as stock at a certain price. You are not actually purchasing the stock. With options, it is possible to make money if the stock goes up OR if it goes down.

Option contracts usually represent 100 shares of stock. If you typically trade 100 shares of stock, trade one option contract and so on…

Options are contracts giving the owner the right to buy or sell at a fixed price (typically called the ’strike price’) for a given period of time. Here is an example of a standard quote on an option:

XYZ January 70 CALL AT $3.10.

The XYZ refers to the stock that the option is based on
The January refers to the month the option expires
The 70 is the strike price, so the stock will change hands at $70
The CALL refers to the type of option
The $3.10 is the premium or per-share cost of the option.