Call and put option live prices

Options: Calls and Puts. 6. Financial Statements 7. Financial Ratios 8. Assets 9. Liabilities 10. Red Flags. 16. Alternative Investments 17. Portfolio Management. An option is common form of a derivative. It's a contract, or a provision of a contract, that gives one party (the option holder ) the right, but not the obligation to perform a specified transaction with another party (the option issuer or option writer ) according to specified terms. Options can be embedded into many kinds of contracts. For example, a corporation might issue a bond with an option that will allow the company to buy the bonds back in ten years at a set price. Standalone options trade on exchanges or OTC . They are linked to a variety of underlying assets. Most exchange-traded options have stocks as their underlying asset but OTC-traded options have a huge variety of underlying assets ( bonds , currencies, commodities, swaps , or baskets of assets). There are two main types of options: calls and puts: Call options provide the holder the right (but not the obligation) to purchase an underlying asset at a specified price (the strike price), for a certain period of time. If the stock fails to meet the strike price before the expiration date, the option expires and becomes worthless. Investors buy calls when they think the share price of the underlying security will rise or sell a call if they think it will fall. Selling an option is also referred to as ''writing'' an option.

Put options give the holder the right to sell an underlying asset at a specified price (the strike price). The seller (or writer) of the put option is obligated to buy the stock at the strike price. Put options can be exercised at any time before the option expires. Investors buy puts if they think the share price of the underlying stock will fall, or sell one if they think it will rise. Put buyers - those who hold a "long" - put are either speculative buyers looking for leverage or "insurance" buyers who want to protect their long positions in a stock for the period of time covered by the option. Put sellers hold a "short" expecting the market to move upward (or at least stay stable) A worst-case scenario for a put seller is a downward market turn. The maximum profit is limited to the put premium received and is achieved when the price of the underlyer is at or above the option's strike price at expiration. The maximum loss is unlimited for an uncovered put writer. To obtain these rights, the buyer must pay an option premium (price). This is the amount of cash the buyer pays the seller to obtain the right that the option is granting them.

The premium is paid when the contract is initiated. Q. Which of the following statements about the value of a call option at expiration is FALSE? A. The short position in the same call option can result in a loss if the stock price exceeds the exercise price. B. The value of the long position equals zero or the stock price minus the exercise price, whichever is higher. C. The value of the long position equals zero or the exercise price minus the stock price, whichever is higher. D. The short position in the same call option has a zero value for all stock prices equal to or less than the exercise price. Option Value And Pricing. Option Value and Pricing. How are Options Priced? Finding Profitable Options to Trade. Definition of Option Value and Option Pricing: The pricing of call options, like everything on Wall Street, is based on supply and demand created by the buyers and sellers of that option at that point in time. Beyond this simple supply and demand explanation of option pricing, you should also know that there are several formulas that Wall Street mathematicians have developed to approximate a fair price of call and put options. The most popular formula is called The Black Scholes Option Pricing Model.

That Model is pretty complex, but what it says is the main factors affecting the price of options are the following: the difference between the strike price of the option and the current price of the underlying stock the number of days left until the option expires, and the expected volatility of the underlying stock. Clearly the difference between the strike price and the current price is the most important factor. The right to buy Google (GOOG) at $700 when GOOG is at $600 should be worth less than the right to buy GOOG at $650. Likewise the right to by GOOG in 3 months at $650 should be worth more than the right to buy GOOG at the same price in 30 days. To the final point of volatility, since GOOG can easily fluctuate $10 in a day, the GOOG options should be priced more than the GE options whose stock price fluctuates 50 cents or less in a day. Once you understand those 3 elements, then learn to start thinking of option prices as having 2 components. These are the "in-the-money" value (also called the intrinsic value) and the time value (also called the risk premium). A call option to buy AAPL at $335 when AAPL is trading at $340 is "in-the-money" $5 so you know the price will be at least $5. You might find this option to actually be trading at $6. That extra $1 is called the time value or risk premium and it represents the extra amount the market is willing to pay to basically bet the price of AAPL will continue to go up. Understanding Pricing of Call Options : Let me explain the pricing of call options by walking you through the 3 bullet points above. First is the difference between the the strike price of the option and the underlying stock. I hope it is clear that if the AAPL stock is at $300 then the $310 call would be more expensive than the $320 call and the $320 call would be more expensive than the $330 call, etc.

Clearly there is a greater chance of the AAPL stock going up $10 than there is of the AAPL stock going up $20. Take a look at the chart below which shows AAPL options for January and you will see that the call options with the lower strike prices are more expensive than the higher strike prices. The second important factor that influences the price is the number of days left until the call or put expires. If today is January 1st and we are comparing the prices of the AAPL January $310 call to the February $310 call, then the January option has about 15 calendar days left and the February option has about 45 days left until expiration. We would expect to find the February options more expensive than the January options. In the screen print above, we even see that the first option, a $305 call expiring Feb 04, 2011 is priced at $31.50 and the second option is also a $305 call expiring Feb 19th, 2011 is priced at $32.25. These extra 15 days are adding $0.75 to the price of the option. The third important factor that influences the price is the expected volatility of the stock in the days remaining to expiration. Naturally, the prices of options on very volatile stocks are more expensive than the price of low volatility stocks. Stocks that move frequently move a couple of dollars a day (like Google) generally have expensive options compared to a stocks that only move a dime or two a day (like General Electric). On the topic of volatility, it is also important to note that the prices of options frequently get more expensive during the week of an expected earnings announcement and then return to normal the day after an earnings release. Why is this? Because the most volatile days for stocks are the days that earnings surprises are announced. Call and Put Trading Tip: Actually, we are more concerned with trading days left than calendar days.

Since the option markets are closed on the weekend and Holidays, the January options might have only 11 trading days left and the February options might have only 33 trading days left. Logically, the February $310 call will be more expensive than the January $310 call, and the March $310 call will be more expensive than the February. Here are the top 10 option concepts you should understand before making your first real trade: Options Resources and Links. Options trade on the Chicago Board of Options Exchange and the prices are reported by the Option Pricing Reporting Authority (OPRA): The new Firefox. Download Firefox — English (US) Your system may not meet the requirements for Firefox, but you can try one of these versions: Download Firefox — English (US) Your system doesn't meet the requirements to run Firefox. Your system doesn't meet the requirements to run Firefox. Please follow these instructions to install Firefox. Please follow these instructions to install Firefox. The best Firefox ever. Uses 30% less memory than Chrome.

Truly Private Browsing with Tracking Protection. all things Firefox. If you haven’t previously confirmed a subscription to a Mozilla-related newsletter you may have to do so. Please check your inbox or your spam filter for an email from us. Advanced Install Options & Other Platforms. Download Firefox for Windows. Download Firefox for macOS. Download Firefox for Linux. Download Firefox — English (US) Your system may not meet the requirements for Firefox, but you can try one of these versions: Download Firefox — English (US) Your system doesn't meet the requirements to run Firefox. Your system doesn't meet the requirements to run Firefox. Please follow these instructions to install Firefox. Call and Put Options, Definitions and Examples. Descriptions of call and put options. Definition of Call and Put Options: Call and put options are derivative investments (their price movements are based on the price movements of another financial product, called the underlying). A call option is bought if the trader expects the price of the underlying to rise within a certain time frame.

A put option is bought if the trader expects the price of the underlying to fall within a certain time frame. Put and calls can also be sold or written, which generates income, but gives up certain rights to the buyer of the option. Breaking Down the Call Option. A Call is an options contract that gives the buyer the right to buy the underlying asset at the strike price at any time up to the expiration date (US style options). The strike price is the price at which an option buyer can buy the underlying asset. For example, a stock call option with a strike price of 10 means the option buyer can use the option to buy that stock at $10 before the option expires. Options expirations vary, and can have short-term or long-term expiries. It is only worthwhile for the call buyer to exercise their option, and force the call seller to give them the stock at the strike price, if the current price of the underlying is above the strike price. For example, if the stock is trading at $9 on the stock market, it is not worthwhile for the call option buyer to exercise their option to buy the stock at $10, because they can buy it for a lower price ($9) on the stock market. The call buyer has the right to buy a stock at the strike price for a set amount of time. If the price of underlying moves above the strike price, the option will be worth money (has intrinsic value). The trader can sell the option for a profit (this is what most calls buyers do), or exercise the option at expiry (receive the shares). For these rights the call buyer pays a "premium". The call sellerwriter of the option receives the premium. Writing call options is a way to generate income.

The income from writing a call option is limited to the premium received though, while a call buyer has unlimited profit potential. One call option represents 100 shares, or a specific amount of the underlying asset. Call prices are typically quoted per share. Therefore, to calculate how much buying a call option will cost, take the price of the option and multiply it by 100 (for stock options). Call options can be In the Money, or Out of the Money. In the Money means the underlying asset price is above the call strike price. Out of the Money means the underlying asset price is below the call strike price. When you buy a call option you can buy it In, At, or Out of the money. At the money means the strike price and underlying asset price are the same. Your premium will be larger for an In the Money option (because it already has intrinsic value), while your premium will be lower for Out of the Money call options.

Breaking Down the Put Option. A Put is an options contract that gives the buyer the right to sell the underlying asset at the strike price at any time up to the expiration date (US style options). The strike price is the price at which an option buyer can sell the underlying asset. For example, a stock put option with a strike price of 10 means the put option buyer can use the option to sell that stock at $10 before the option expires. It is only worthwhile for the put buyer to exercise their option, and force the put seller to give them the stock at the strike price, if the current price of the underlying is below the strike price. For example, if the stock is trading at $11 on the stock market, it is not worthwhile for the put option buyer to exercise their option to sell the stock at $10, because they can sell it for a higher price ($11) on the stock market. The put buyer has the right to sell a stock at the strike price for a set amount of time. If the price of underlying moves below the strike price, the option will be worth money. Ready to start building wealth? Sign up today to learn how to save for an early retirement, tackle your debt, and grow your net worth. The trader can sell the option for a profit (what most put buyers do), or exercise the option at expiry (sell the physical shares). For these rights the put buyer pays a "premium". The put sellerwriter receives the premium.

Writing put options is a way to generate income. The income from writing a put option is limited to the premium received though, while a put buyer's maximum profit potential occurs if the stock goes to zero. One put option represents 100 shares, or a specific amount of the underlying asset. Put prices are typically quoted per share. Therefore, to calculate how much buying a put option will cost, take the price of the option and multiply it by 100 (for stock options). Put options can be In the Money, or Out of the Money. In the Money means the underlying asset price is below the put strike price. Out of the Money means the underlying asset price is above the put strike price. When you buy a put option you can buy it In, At, or Out of the money. Your premium will be larger for an In the Money option (because it already has intrinsic value), while your premium will be lower for Out of the Money put options. Other Things to Know About Puts and Calls. The pricing of options is rather complex, because the price (premium) of the option is based on many factors, including how far in or out of the money it is, the volatility of the underlying asset and how far the option is from expiration.

These option pricing inputs are called the 'Greeks', and they are worth studying before delving into options trading. Live Ventures Incorporated (LIVE) Option Chain. Stock Details. COMPANY NEWS. FUNDAMENTALS. Edit Symbol List. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages. Don't know the stock symbol? Use the Symbol Lookup tool. Alphabetize the sort order of my symbols. Investing just got easier… Sign up now to become a NASDAQ.

com member and begin receiving instant notifications when key events occur that affect the stocks you follow. Call and put options are quoted in a table called a chain sheet. The chain sheet shows the price, volume and open interest for each option strike price and expiration month. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages. Customize your NASDAQ. com experience. Select the background color of your choice: Select a default target page for your quote search: Please confirm your selection: You have selected to change your default setting for the Quote Search. This will now be your default target page unless you change your configuration again, or you delete your cookies. Are you sure you want to change your settings? Please disable your ad blocker (or update your settings to ensure that javascript and cookies are enabled), so that we can continue to provide you with the first-rate market news and data you've come to expect from us. Options.

Symbol Naming Conventions. If you want to see Futures Series of Nifty for the month Jan 2015, you can enter symbol name as NIFTY15JANFUT. Not we are not providing Continuous contracts as of now. You can find symbols only related to contract-wise data. Index and Stock Options start with the name of the underlying (in capital letters), followed by year (2 digits), month (3 characters), strike price and type (2 characters) – EXACTLY in this sequence. See examples below. Options Symbols (Index and Stock Options) : Example 1: NIFTY15FEB8500CE means Index Option of symbol NIFTY, for the year 15 (i. e. 2015), for the month February (FEB), for the strike price 8500 and the type is Call European. Example 2 : BANKNIFTY15JAN17500PE means Index Option of symbol BANKNIFTY, for the year 15 (i. e. 2015), for the month January (JAN), for the strike price 17500 and the type is Put European. Example 3 : INFY15JAN2000CE means Stock Option of Symbol INFY, for the year 15 (i. e. 2015), for the month January (JAN), for the strike price 2000 and the type is call European. Example 4 : GMRINFRA15JAN17.5PE means Stock Option of Symbol GMRINFRA, for the year 15 (i. e. 2015), for the month January (JAN), for the strike price 17.50 and the type is Put European. Required US Government Disclaimer & CTFC Rule 4.41. © Copyright 2015 Marketcalls Financial Services Pvt Ltd · All Rights Reserved · And Our Sitemap · All Logos & Trademark Belongs To Their Respective Owners· Options Trading Center.

Enter up to 25 symbols to get the option chain for your favorite stock. View option chains for: Today's Market Activity. Latest News Headlines. Enter up to 25 symbols separated by commas or spaces in the text box below. These symbols will be available during your session for use on applicable pages. Customize your NASDAQ. com experience. Select the background color of your choice: Select a default target page for your quote search: Please confirm your selection: You have selected to change your default setting for the Quote Search. This will now be your default target page unless you change your configuration again, or you delete your cookies. Are you sure you want to change your settings? Please disable your ad blocker (or update your settings to ensure that javascript and cookies are enabled), so that we can continue to provide you with the first-rate market news and data you've come to expect from us. US Search Desktop. We appreciate your feedback on how to improve Yahoo Search .

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asian incest gameshow. pizzagate and other fake news is readily available for quacks to digest and compromise the safety of this country. why is yahoo search engine including news from unreliable sources that are condoning violence against the public? do you care about society at all, do you care about whether or not these organizations are promoting violence and corrupting the truth? YAHOO CANNOT CONTINUE TO PUBLISH "NEWS" FROM UNRELIABLE SOURCES. YOU ARE THE CAUSE OF THE PROBLEM. RUSSIAN INFLUENCING OUR MEDIA IS CONDONED BY YOU. I am requesting that you do a manual review of the organic results on "chinook boot dryers" I am requesting that you do a manual review of the organic results on "chinook boot dryers", and many other "boot dryer" and "boot dryers" keywords. First there is not much variety being displayed, since the search results are almost ALL going to websites controlled by the same guy who has built the following websites, and interlinked them together and crowded out all of the other possible search results: + his pages on Amazon (note the seller is SEA Products, which is the same guy who runs all of the above websites. Scott E Allen.) You can verify this by looking at the phone numbers and addresses on the above websites, plus all of the sites look like each other. This seems very spammy and NOT a good representation of Yahoo's stellar results. Also, it sends the signal to others that all you need to do is build out 5-6 ****** websites, link them together and take over the top search results.

which isn't fair to other operators or customers trying to find the best products. Another interesting thing about the results for "chinook boot dryers" is the fact that this guy has the domain chinookbootdryer. com, and that he is NOT the manufacturer of Chinook Boot Dryers but his organic listing is being treated with domain authority as though he was the manufacturer. We spoke to the actual manufacturer and found out that this guy is only one of many of their dealers and does not work for the company or have any affiliation with them in any way. You can verify this by calling the manufacturer yourself. Their number is 203-366-3840. We have researched many other "boot dryer" keyword results and have noted that his websites are ALL dominant and taking up almost all of the page 1 organic search results. We hope you do the right thing and don't reward this behaviour, since the rest of us are trying to stick to Yahoo's guidelines and play by the rules. with one website. Thanks for your consideration and support!

I am requesting that you do a manual review of the organic results on "chinook boot dryers", and many other "boot dryer" and "boot dryers" keywords. First there is not much variety being displayed, since the search results are almost ALL going to websites controlled by the same guy who has built the following websites, and interlinked them together and crowded out all of the other possible search results: + his pages on Amazon (note the seller is SEA Products, which is the same guy who runs all of the above websites. Scott… more. I can't sign into my account because I don't have access to the phone number it's linked to anymore. I can't sign into my main email account because I no longer have access to the phone number it's linked to. How can I sign in with the old password system? Having no other option to sign in other than the "secure" way is stupid and is upsetting when I need to access my email from my computer! I'm logged in on my new device but I have no access from my desktop where I need access it from. Stock screener crashes. choice to remove real names and birthdays from account to stop hackers from stealing names. choice to remove real name and real birthdays from list account to stop hackers from Identity theft. All people alive a long time God bless everyone. Be happy but alert everyone to sad. My portfolio is missing, please reset my page so it shows my information again.

When you launch new webpage, install a QC team so peoples' data is not missing. i need to check on an order coming to walmart. I need to check on an item being shipped to walmart today. Some downloads on the internet are linked to a Yahoo hijack of Firefox and Chrome browsers where searches are redirected to Yahoo search. Some downloads on the internet are linked to a Yahoo hijack of Firefox and Chrome browsers where searches are redirected to Yahoo search. This has to be damaging your reputation. You need to take steps to stop this from happening. should be able to go dir. to the program I am referencing. New House Hunter Intl.

do not tell what job the couple has, relating to their new location also filing does not always show each room in houseapt. Inquiring minds want to know!! I only got about 25 shaves out of the large can of this shaving gel. That SUCKS> I would expect that from a cheapie dollar type of product, not THE # 1 brand in shaving. stuff.. Yes I am ****** OFF> fix broken search functionality. You can improve by making it work as advertised. And to be better restore lost functionality from say, 5 or more years ago. For example, this is broken: search for word in subject succeeds when use the time of anytime but fails when I use last 7 days. I can see the mail with search word at the first mail in my inbox which I sent 15 minutes ago. Search used to be terrific, better than gmail. But it has deteriorated. Email address should be open to pace this info.

Take my photo off of image and remove crimil record web sites attached to name I did not give permission to place there would like IP address of who put it on line thank you when done email me. Kevin gerlach and Kevin Michael gerlach both tks. Don't see your idea? Post a new idea… US Search Desktop. Feedback and Knowledge Base. Give feedback. 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We have made changes to increase our security and have reset your password. We've just sent you an email to . Click the link to create a password, then come back here and sign in. Call Options. A Call option gives the owner the right, but not the obligation to purchase the underlying asset (a futures contract) at the stated strike price on or before the expiration date. They are called Call options because the buyer of the option can “call” away the underlying asset from the seller of the option. In order to have this right or choice the buyer makes a payment to the seller called a premium. This premium is the most the buyer can lose, as the seller can never ask for more money once the option is bought. The buyer then hopes the price of the commodity or futures will move up because that should increase the value of his Call option, allowing him to sell it later for a profit. Let’s look at a couple of examples to help explain how a Call works. Real Estate Call Option Example. Let’s use a land option example where you know of a farm that has a current value of $100,000, but there is a chance of it increasing drastically within the next year because you know that a hotel chain is thinking of buying the property for $200,000 to build a huge hotel there. So you approach the owner of the land, a farmer, and tell him you want the option to buy the land from him within the next year for $120,000 and you pay him $5,000 for this right or option.

The $5,000 or premium, you give to the owner is his compensation for him giving up the right to sell the property over the next year to someone else and requiring him to sell it to you for $120,000 if you so choose. A couple of months later the hotel chain approaches the farmer and tell him they will buy the property for $200,000. Unfortunately, for the farmer he must inform them that he cannot sell it to them because he sold the option to you. The hotel chain then approaches you and says they want you to sell them the land for $200,000 since you now have the rights to the property’s sale. You now have two choices in which to make your money. In the first choice you can exercise your option and buy the property for $120,000 from the farmer and turn around and sell it to the hotel chain for $200,000 for a profit of $75,000. $200,000 from the hotel chain. &mdash$120,000 to the farmer. &mdash$5,000 for the price of the option. Unfortunately, you do not have $120,000 to buy the property so you are left with the second choice. The second choice allows you to just sell the option directly to the hotel chain for a handsome profit and then they can exercise the option and buy the land from the farmer. If the option allows the holder to buy the property for $120,000 and the property is now worth $200,000 then the option must be worth at least $80,000, which is exactly what the hotel chain is willing to pay you for it. In this scenario you will still make $75,000. $80,000 from the hotel chain.

&mdash$5,000 paid for the option. In this example everyone is happy. The farmer got $20,000 more than he thought the land was worth plus $5,000 for the option netting him a $25,000 profit. The hotel chain gets the property for the price they were willing to pay and can now build a new hotel. You made $75,000 on a limited risk investment of $5,000 because of your insight. This is the same choice you will be making in the commodity and futures options markets you trade. You will typically not exercise your option and buy the underlying commodity because then you will have to come up with the money for the margin on the futures position just as you would have had to come up with the $120,000 to buy the property. Instead just turn around and sell the option in the market for your profit. Had the hotel chain decided no to but the property then you would have had to let the option expire worthless and would have lost the $5,000. Futures Call Option Example. Now let’s use an example that you may actually be involved with in the futures markets. Assume you think Gold is going to go up in price and December Gold futures are currently trading at $1,400 per ounce and it is now mid-September. So you purchase a December Gold $1,500 Call for $10.00 which is $1,000 each ($1.00 in Gold is worth $100). Under this scenario as an option buyer the most you are risking on this particular trade is $1,000 which is the cost of the option.

Your potential is unlimited since the option will be worth whatever December Gold futures are above $1,500. In the perfect scenario, you would sell the option back for a profit when you think Gold has topped out. Let’s say gold gets to $1,550 per ounce by mid-November (which is when December Gold options expire) and you want to take your profits. You should be able to figure out what the option is trading at without even getting a quote from your broker or from the newspaper. Just take where December Gold futures are trading at which is $1,550 per ounce in our example and subtract from that the strike price of the option which is $1,400 and you come up with $150 which is the options intrinsic value. The intrinsic value is the amount the underlying asset is though the strike price or “in-the-money.” $1,550 Underlying Asset (December Gold futures) $150 Intrinsic Value. Each dollar in the Gold is worth $100, so $150 dollars in the Gold market is worth $15,000 ($150X$100). That is what the option should be worth. To figure your profit take $15,000 - $1,000 = $14,000 profit on a $1,000 investment. $15,000 option’s current value. &mdash$1,000 option’s original price. $14,000 profit (minus commission) Of course if Gold was below your strike price of $1,500 at expiation it would be worthless and you would lose your $1,000 premium plus the commission you paid.

Online trading has inherent risk due to system response and access times that may vary due to market conditions, system performance, volume and other factors. An investor should understand these and additional risks before trading. Options involve risk and are not suitable for all investors. Futures, options on Futures, and retail off-exchange foreign currency transactions involve substantial risk and are not appropriate for all investors. Please read Risk Disclosure Statement for Futures and Options prior to applying for an account. *Low margins are a double edged sword, as lower margins mean you have higher leverage and therefore higher risk. All commissions quoted are not inclusive of exchange and NFA fees unless otherwise noted. Apex does not charge for futures data, but effective January 1, 2015 the CME charges $1-15 per month depending on the type of data you require. Option Value And Pricing. Option Value and Pricing. How are Options Priced? Finding Profitable Options to Trade.

Definition of Option Value and Option Pricing: The pricing of call options, like everything on Wall Street, is based on supply and demand created by the buyers and sellers of that option at that point in time. Beyond this simple supply and demand explanation of option pricing, you should also know that there are several formulas that Wall Street mathematicians have developed to approximate a fair price of call and put options. The most popular formula is called The Black Scholes Option Pricing Model. That Model is pretty complex, but what it says is the main factors affecting the price of options are the following: the difference between the strike price of the option and the current price of the underlying stock the number of days left until the option expires, and the expected volatility of the underlying stock. Clearly the difference between the strike price and the current price is the most important factor. The right to buy Google (GOOG) at $700 when GOOG is at $600 should be worth less than the right to buy GOOG at $650. Likewise the right to by GOOG in 3 months at $650 should be worth more than the right to buy GOOG at the same price in 30 days. To the final point of volatility, since GOOG can easily fluctuate $10 in a day, the GOOG options should be priced more than the GE options whose stock price fluctuates 50 cents or less in a day. Once you understand those 3 elements, then learn to start thinking of option prices as having 2 components. These are the "in-the-money" value (also called the intrinsic value) and the time value (also called the risk premium). A call option to buy AAPL at $335 when AAPL is trading at $340 is "in-the-money" $5 so you know the price will be at least $5. You might find this option to actually be trading at $6. That extra $1 is called the time value or risk premium and it represents the extra amount the market is willing to pay to basically bet the price of AAPL will continue to go up. Understanding Pricing of Call Options : Let me explain the pricing of call options by walking you through the 3 bullet points above. First is the difference between the the strike price of the option and the underlying stock.

I hope it is clear that if the AAPL stock is at $300 then the $310 call would be more expensive than the $320 call and the $320 call would be more expensive than the $330 call, etc. Clearly there is a greater chance of the AAPL stock going up $10 than there is of the AAPL stock going up $20. Take a look at the chart below which shows AAPL options for January and you will see that the call options with the lower strike prices are more expensive than the higher strike prices. The second important factor that influences the price is the number of days left until the call or put expires. If today is January 1st and we are comparing the prices of the AAPL January $310 call to the February $310 call, then the January option has about 15 calendar days left and the February option has about 45 days left until expiration. We would expect to find the February options more expensive than the January options. In the screen print above, we even see that the first option, a $305 call expiring Feb 04, 2011 is priced at $31.50 and the second option is also a $305 call expiring Feb 19th, 2011 is priced at $32.25. These extra 15 days are adding $0.75 to the price of the option. The third important factor that influences the price is the expected volatility of the stock in the days remaining to expiration. Naturally, the prices of options on very volatile stocks are more expensive than the price of low volatility stocks. Stocks that move frequently move a couple of dollars a day (like Google) generally have expensive options compared to a stocks that only move a dime or two a day (like General Electric). On the topic of volatility, it is also important to note that the prices of options frequently get more expensive during the week of an expected earnings announcement and then return to normal the day after an earnings release. Why is this? Because the most volatile days for stocks are the days that earnings surprises are announced. Call and Put Trading Tip: Actually, we are more concerned with trading days left than calendar days. Since the option markets are closed on the weekend and Holidays, the January options might have only 11 trading days left and the February options might have only 33 trading days left.

Logically, the February $310 call will be more expensive than the January $310 call, and the March $310 call will be more expensive than the February. Here are the top 10 option concepts you should understand before making your first real trade: Options Resources and Links. Options trade on the Chicago Board of Options Exchange and the prices are reported by the Option Pricing Reporting Authority (OPRA):