Options are quoted in per share prices, but only sold in 100 share lots. For example, a call option might be quoted at $1, but you would pay $100 because options are always sold in 100-share lots.
The strike Price (or Exercise Price) is the price the underlying security can be bought or sold for, as detailed in the option contract. Options are identified by the month they expire, whether they are put or call options, and the strike price. For example, an “XYZ May30 Call” would be a call option on XYZ stock with a strike price of 30 that expires in May.
The expiration date is the month in which the option expires. All options expire on the third Friday of the month unless that Friday is a holiday, then the options expire on Thursday. By trading the options instead of the stock it is possible to realize far greater returns while only risking a fraction of the capital. This is called leverage and is the main advantage to option trading over other wealth creation strategies.
The Options Industry Council (OIC) announced that new annual volume record was set in 2007 with a total of 2,862,826,218 contracts changing hands, surpassing 2006’s record by 41.18%. Equity options volume reached 2,592,102,961 contracts, exceeding the 1,844,181,918 total equity options volume contracts traded in 2006 by 40.56% percent.
Top 10 Volume Days: All occurred in 2007
Average daily equity options volume: 10,327,103
Average daily total options volume: 11,405,682
Option trading allows you to profit in any type of market and offers extreme leverage
Option trading allows you to produce exceptional returns in a day’s time
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