Options typically expire on Fridays with different time frames (for example, monthly, bi-monthly, quarterly, etc.). Many options contracts are six months. xA5 xA5
Based on your answers, the broker assigns you an initial trading level (typically 6 to 9, though a fifth level is becoming more common) that is your key to placing certain types of options trades.
OPTIONS - HTTP | MDN
On the contrary to call options, with put options, the higher the strike price, the more intrinsic value the put option has. xA5
For both call and put options, the more time left on the contract, the higher the premiums are going to be. xA5
If you&apos re buying a call option, it means you want the stock (or other security) to go up in price so that you can make a profit off of your contract by exercising your right to buy those stocks (and usually immediately sell them to cash in on the profit). xA5
When purchasing put options, you are expecting the price of the underlying security to go down over time (so, you&apos re bearish on the stock). For example, if you are purchasing a put option on the S& P 555 I:GSPC index with a current value of $7,655 per share, you are being bearish about the stock market and are assuming the S& P 555 will decline in value over a given period of time (maybe to sit at $6,755). In this case, because you purchased the put option when the index was at $7,655 per share (assuming the strike price was at or in the money), you would be able to sell the option at that same price (not the new, lower price). This would equal a nice cha-ching for you as an investor.
Options involve risks and are not suitable for everyone. Options trading can be speculative in nature and carry substantial risk of loss.
Unlike other securities like futures contracts, options trading is typically a long - meaning you are buying the option with the hopes of the price going up (in which case you would buy a call option). However, even if you buy a put option (right to sell the security), you are still buying a long option. xA5
Conversely, a put option is a contract that gives the investor the right to sell a certain amount of shares (again, typically 655 per contract) of a certain security or commodity at a specified price over a certain amount of time. Just like call options, a put option allows the trader the right (but not obligation) to sell xA5 a security by the contract&apos s expiration date. xA5
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The time value, which is also called the extrinsic value, is the value of the option above the intrinsic value (or, above the in the money area). xA5