Basic Options Trading Training – How to Read Option Price Listings

Depending on which site you are on, you can find a variety of option price listings. Most of the time, however, most sites will contain the same basic information. You can find at least some of the information listed below.

You will often see the company’s stock symbol. In addition, you will see whether the option is a call or a put. The call is the contract that gives the right to buy an asset at a specific price. A put, on the other hand, will let you sell the asset at a particular price. There are different types of options called “exotics” like the chooser. The chooser will let the investor choose the type of option they will select before the expiration date.

The section will show when the option contract will expire. The expiration date is important because it tells when the contract must expire. If the investor chooses to exercise their option, they can buy or sell the asset or else lose their premium. If they choose to not exercise their option, they will lose the premium that they put down for the investment.

You will also see the strike price of the asset. The strike price is the price that the asset will have to be bought or sold if the investor chooses to exercise their option. The bid will be shown, which is the price that the buyer is willing to pay for the option. This bid will represent the premium of the option, not the price of the stock itself.

You can find the Ask, which is the price at which the investor is willing to sell the asset. The Last Sale is also shown, which will be the amount the option was last sold at, and the Net or change which shows the price over the previous sale.

The Open Interest will be shown, which is the total number of options that are open.There will always be a set number of un-exercised options contracts that are still available. This number can and will change since new contracts can always be written. This number is a very influential part of the price since the number of Open Interest contracts that are still available will directly influence the price changes. Finally, you will see the current number of trades for that day.

Not all of the sites will show the same information. Some listings will obviously show more things than other listings. Sometimes, you will see the listing of the stock in different ways or you will see some of these factors and information but not others. Some will also include an letter to indicate which exchange it is in, such as the CBOE for the Chicago Board of Exchange.

Typically, when you invest in options contracts, you are dealing with shares in 100. One option contract is 100 shares. So when you calculate your numbers, you will need to calculate them based on 100 shares whenever you try to project your data.

         

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