Jun 28th, 2015
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Buying a put option - This is a graphical interpretation of the payoffs and profits generated by a put option as seen by the buyer of the option. A lower stock price means a higher profit. Eventually, the price of the underlying security will be low enough to fully compensate for the price of the option.

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CandlestickForumOptionTrainingCopywrited @ June 2009Definitions1Calls andPutsBuying AssetsLong2Selling AssetsShortBuying Callsand PutsOptions3Selling Callsand PutsObligationsBuying Calls 1.Right to buy a stock 2.A fixed price 3.During a specific Time period4Buying Puts 1.Right to sell a stock 2.A fixed price 3.During a specific timeperiod.Selling Calls or PutsWritingBecomesan Obligation5Underlying AssetStockBondCurrencyCommodityExercise Price or Strike PriceThe Price of the underlying Asset inwhich the option is being Bought/Sold.Stock prices usually at \$5 or \$2.50increments6Expiration dateThe date in which the option terminatesFor Stocks, the third Friday of eachmonthExerciseExercising an option is acting upon theoption to take the stock.It is associated with long positions7AssignAn assignment is when an investor isnotified that they are having stock put tothem.Associated with the Put side of a tradePremium TheActual price of the option8In the Money = stock price below strike priceAt the money = stock price at strike pricelevelOut of the money = Stock Price above thestrike price levelIntrinsic ValueThe actual Price of the stock minus theStrike priceExample Stock price is trading a\$53.00,the strike price is \$50.00, the Intrinsicvalue of an option is \$3.009Time ValueThe difference in the ac

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