Options Trading Tutorial

How can the strike price of a call option begin lower than the current market price? Regarding a call option how can the contract begin 'In The Money"? The price of a stock is $5 and the strike price is $3 at the beginning of the contract.

Can a call be exercised below the strike price? Hi, Can a call be exercised below the strike price? For example: Say you sell a call from ABC company and the stock is below the strike price can the holder manually exercise the call regardless if the strike price is reached or not? Thank you!

What happens if I sell a call and the strike price is AT the money? Hi! What happens if I sell a call and the strike price is AT the money? Will it be called away or will it expire worthless? Thank you!

What is the price of a call option on the stock that has a strike price of $21 and that expires in 1 year? The current price of a stock is $20. In 1 year, the price will be either $26 or $16. The annual risk-free rate is 5%. Find the price of a call option on the stock that has a strike price of $21 and that expires in 1 year.

I wrote an OTM covered call and the spot rose to the strike price. How can I preserve the stock gain? I wrote an OTM covered call and the stock price rose to the strike price. The option has not yet been executed and I am wondering what a good method would be to preserve the gain in case the stock price drops again? The option now has quite a bit of time value so closing that position will eat away at half of the stock gains. Is the best choice to just wait and hope the stock price doesn't fall?

what does strike price mean in call and put options? Hello, I am playing Cashflow 202 (a game about investing). I was wondering what does the strike price mean in a call and put option?

How to choose a stock strike price? I'm looking at call options for a stock that has a price of 33, and am choosing between one with a strike price of 35 and one with a strike price of 40. Which call will cost me more and why? If the stock is not very volatile and there is little time left until expiration of the option, which would be more likely to pay off and why? If I think something is going to make the stock rise and if I don't mind losing your whole investment, which call is more likely to make me the most in percent terms and why?

How is maximum profit that can be earned on an option contract calculated if strike price & buy price is known For instance, if one put option was purchased for $300 and its strike price is 30, how can I calculate the maximum profit that can be earned on this option contract? Is there a formula to this?

will called option be exercised when stock price is far beyond the strike price BEFORE it expires ? my stock is $27, far beyond the strike price of $22, but my stock is still not sold, is this the only way that I have to wait until the option expires in order for my stock to be bought ? or under what circumstance that stock will be bought before option is expired ? and it is too expensive to buy back and close the called option right now.

Is there any problems with buying a stock option with lower strike price? than the stock quote and then excerise the option contract and sell that stock at the higher market quote price? Is there a catch some where? Can I buy .GECY@$6.80 w/ strike price $27.500 exercise the call option buy and sell GE@$34.21. Thanks

what happens to a option strike price with a split? say you have a long call @50 with a 2/1 split would the strike price change to 25?

Why options price not zero when stock price and strike price are the same? Ok i get what premium is( i guess ) but my profs gave me an example today that showed, if stock price is 25$ and stike price is 25 also, the exericse value is 0 ( which i get ) and option price is 3 and premium is 3( why i dont get ) and then when stock price is 30 and strike is 25 then exercise value is 5( understandable) and option price is 7.50 and option premium is 2.5 why is that, can someone help pllzz

When exercising a call option to buy the shares at the strike price, is that done in the open market? Let's say the current Market price is $50 and your strike price is $20. If you decide to exercise the option and buy your shares, is that done on the open market? Who would sell me their shares when the market price is $50? Please just answer these questions, I don't need someone to copy and paste what's at wikipedia or something. Thanks!

If you have to wait until the end of a trading day to cash in a put and the strike price was reached during th e day but the price went back up by the end of the day, are you out of luck? Did you lose that opportunity since the price per share at the end of the day was higher than your strike price? I am talking about exercising or cashing in on a put buy

Employee stockoptions-current stock value well below my strike price, can I sell at a loss for a tax writeoff? Current strike price is $11 Current value is about $7. Can I excersize my shares, and use the "loss" as a tax write off on my taxes?

an investor sells a European call option with strike price of K and maturity T? an investor sells a European call option with strike price of K and maturity T and buys a put with the same strike price and maturity. Describe investor's position.

what's the formula for determining strike price intervals in options.? Suppose a range for a share is between 50 & 250. Then how we ll determine the strike price intervals for that scrip in options.

Is selling to close a call option the same as exercising the option at the strike price then selling it? This has been confusing me for some time, any help would be appreciated. I can't seem to tell if it's the same as exercising the option then selling it, or if it's just selling the option at the bid price. Which one is it? Thanks in advance.

How important is Strike Price? On trading options how important is the strike price? I mean is it like the price target that you think the stock will reach by the certain date? For example if I buy a October call with a strike price of 25 and the current price of the stock is 20 and the price goes to or above 25 I gain ?? and if not what??? :)

If I sell a covered call strike price 35, will my shares be called away as soon as the price goes to $35.01? Or does the price have to go substantially higher? What price would my shares be called away at?

So basically is the only time you make money on options is if they exceed their strike price? So that if a stock goes above a certain value then it would exceed a call strike and if it goes below a certain value it would exceed a put strike? And so depending on how much money you bet on it, you get a return for being right and the right to purchase stock at that strike price?

What happens to call options when a company is bought for cash at less than the strike price? e.g. have a call for $100, competitor announces it is buying all the stock for $95. e.g. I have longterm (LEAP) call for $100. A competitor announces it is buying all the stock for $95. Is the call now worthless or will the call be transfered to the new company?

Is there ever a time when put protection does not allow you to sell your shares for the put strike price? Cause if the stock goes to a low enought level price per share, somebody loses when you can sell your shares at a higher price per share, right?

Covered Call Writing when the stock price is above Strike price? I want to know if this is legal. If so what are my profits.. I bought 300 shares at $8.00 21Aug08. The call option for 7.50 Sep 08 expiration in .85. So can I sell 3 options for $255. What happens now as stock price is above the strike prices. Will the option is exercised immediately? If so what are chances of gains and loss.. I am assuming stock wont go below $7.3

How to enter in to future and derivatives stock market? The procedure to quote the strike price.? I want to play the futures and options. I opened the traing and demat account in hdfc bank.pl guide me the rules and the procedure. Thanks

What happens when the price of a put and the strike price are the same? ? Doesn't this basically eliminate the risk? Wouldn't the premium received buy the shares if the stock were put to you?

Where should I put the strike price of a put to protect daily gains? Trading stocks.

If I sell a put, strike price $150 and the price falls below $150, what is likely to happen? Is there a good chance that the put will be exercised before expiration?

What will happen if the warrant I currently holding is expired and the strike price is below the market price?

I asked about a gas price strike. Can adults communicate without being abusive on the internet? Re: Gas strike May 30, 2007. When posing an answer it is the mature thing to do by not verbally attacking other people. It's ok to disagree cursing and being abusive is not the answer. It is ok to not agree, it is not ok to behave as children.

With reference to "option trading", is a "put" the right to be able to sell a stock at the strike price? If the strike price of a certain put is "in the money" on expiration day, does that mean that I can sell that stock at that price? So if I have regular stocks and the stock price goes down later on expiration day, does that mean that I can now sell my original regular stocks at my put strike price?

how to know strike price from startup just joined if not in written contract? i just started wkg, but noticed that the strike price is not indicated, ex: $.05 or $.20/share, etc.while i have certain #of shares. what's the best way to know by asking, what are some key questions i can asked so i'm not tricked into a false price? from research, employees get 25% discount of what investors' valued shares - is that normal, or case dependent? is this normal not to include this info in contract or depnds on board of directors' mtg then the price is decided? but isn't that already done before the job's offered? thanks!

Will shares be called away before options expiration day for covered calls if strike price is exceeded? Or do the shares only get called away on options expiration day?

Strike price and Stock price in option trading? I'm new to option trading, and I don't want to start trading without understanding everything in option trading. If the stock price of GS(Goldman Sachs) is $144 and I look into options. I'm looking for a call option.The expiration-strike price is July170 and another is July90. The stock price is supposed to be above the strike price, when it expires so it's not worthless. Then why would I purchase a contract of July170?

Should I buy call option contracts to prepare to pay a lower strike price for a stock when that stock goes up? a bunch? Take NLY. If I buy a $20 Mar call contract and NLY goes to $30/share, that means I can buy it for $20 per share even though it went to $30, right? Obviously before the contract expires....right?

So what is in it for the options trader that bets against a strike price ever being reached? So if an option does not get to an exercise point, what happens?

Will i profit if my stock option exceeds its strike price? I have 6 weeks left till my stock option expires. It is an ishares canadian index option. It flirted with the strike price this afternoon and the last 4 days I know time value is important but with only 6 weeks to go if my option exceeds the strike price (depending on how far) will i still profit because of the increase?

If the truckers strike, do you think that will change the price of gasoline? The truckers are threatening a strike, to force the price of gasoline to be lowered at the pump....will this help or not?

If i have a call on a stock, and that stock reaches its price strike, what exactly am i entitled to? Do i gain the different between my bid and strike for 100 shares?

Kindly clarify me about Option premium, strike price, intrinsic value, and par value of a stock with example.? Kindly clarify me about Option premium, strike price, intrinsic value, and par value of a stock with example.

Why do multiple quotes appear in both Calls and Puts for the same strike price in the same month?

Buying a put option - question about strike price? So, I want to buy a put option a stock that is currently trading at $1.50/share. The lowest strike price available is significantly higher than the current market price ($2.50). Lets say I purchase the $2.50 strike price and the stock drops to $1.00/share. What will happen? I have never seen a strike price higher than the current market price for a put option.

as for covered call, why was my stock not bought even the stock price is far beyond the strike price ? is there a solution to avoid the stock is being locked (can not be sold by stock holder) when stock price is far beyond the strike price and the option premium is too high to buy back ? Thanks

Multiple options with same strike price/expiration? How can you find out what different options with the same strike price mean. Several securities have multiple symbols at the same contract strike price and expiration and it is difficult to find out what is different about the contracts. Where can you find out the difference.

Who purchases a call or put if you sell under the strike price but at a profit? (American options)? For example, I purchased a call at $1 with with a $40 strike price with 6 months before expiration and the current underlying stock price per share that is say $25. Say in 3 months the stock ramps up to $35 and the option is now worth $5. I decided to sell in the in 3 months before chancing a decline with 3 months left. When I sell, does the clearing house have to purchase it back? Is the writer of the call obligated to pay even if it never hit the strike price? Or is it market makers purchasing the option? I just do not understand this point in technically who is paying me off in this type of example as I rarely wait it out until I have lost all time value? Thank you in advance!!

Call Option(% of strike price) = 22.08% what does this mean? Can we determine the price of the call option? Assuming the following at the money options on the SPI index are available in the market: Call Option (% of strike Price 4000) = 22.08%

what does it mean if options price + strike is less than stock price? .GQRFG call option is trading for $29 with strike price $35. The underlying stock for that option (HAR) is trading for $64.30 today. Doesn't this mean the option writer is losing money by selling the contract (strike price + option price is $.30 less than the stock price)?

Stock option strike price increments? I need an explanation about stock option strike prices. Once an option reaches/exceeds it's strike price-the price of the contract moves up in certain increments. What are the increments? $10 for every one penny move or what? I AM NOT INTERESTED IN HEARING ABOUT GAMMA AND DELTA a simple explanation will do.

I won a Goldman Sacs April Option with a Strike Price of 190. Should I sell before fed speaks? I only own 5 contracts and paid $2 a contract. The price now is only around $2.60

How is the strike price determined ?

how much margin need for short the call option and buy the call option at different strike price?

For Stock Options: I need someone to explain the strike price to me.? When you buy a call at lets say 2.50 and think it will be to 3.00, how would you know when to sell the option if the stock only rises cents at a time. When would you want to sell the option? Or when would it be best to sit on it til the expiration?

How about all Americans who are opposed to the high price of Gas take a day off work next week - and strike to show their disgust with the government and the oil companies who are evidently doing nothing to relieve us at the pump! I am certain that if millions of people would just go on strike to oppose the high gas prices the government and the oil companies would certainly take notice of them! New to the Accounting field - Don't give up your day job!

If I write a call on RIMM for $200 strike price, expiration in Dec, what can happen to my position...ie what a re the payout possibilities? If the price of RIMM goes to $200, I understand that I have to sell it to the options buyer for that price. What amount of money would I get for renting out the stock to that point to the options buyer? Would I be better off selling this option or buying an option for same?

options....once the strike price is hit, is my contract over? I have an $8.00 strike price and on October 5th the price is $7.99 at 10:05am. At 10:06am the price hits $8.00. Are my contract(s) over that had a strike price of $8.00? How will I know? the shares in my contract are mine (covered). So once the stock price hit's the strike price of $8.00, I have to "buy to close" at market on my own?

what happens if an option's strike price is higher than the market price? My company is merging with another company and will be buying back the stock option plan granted to us. But the strike price granted to some of us is higher than the current market price. I don't know anything about stock options. Does not even have the idea how it works. Will we still be getting something from this? The company promises to pay all shares even if some of the shares have not matured and had promised to pay the amount per share based on the current market's price. Some of us had been granted higher than this amount though.

in case of options trading(call),if the stock is above strike price+premium,directly buy selling that.......? call option can i book profit (or) i need to buy the stock at the strike price at which i took the call option and sell it at the spot price to book profit................

If you buy a futures option call and the strike prices rises? Just a little futures option question: Say you buy a call at the strike price of 9525. The strike price settles at 9600 at expiration. Is this a loss or a gain?????

in call options why buy an option with a strike price below the current stock price im confused...? why would you choose a strike price that is actually below the current value of a stock (I'm looking at an option chain and noticing that you can buy options in the money but how would that work for you if you are seeing that the stock is going to go up even further away from the strike price that is already below the stock price... I thought the whole idea of buying a call was because you thought the value was going to increase over time

Stock options and strike price? Once an option reaches its "strike price", then the option contract can be "exercised", correct? All the website tutorials say that before the option reachs the "strike price" it is worthless. But then there are bid/ask prices on options that have not reached their strike. So, can options be traded for profit/loss even when they are "out of the money"?

How are strike prices on options determined? I know that strike prices start out at $2.50 and go up in increments of $2.50 until the $10 level or so. But how is that determined and who determines it?

If I buy a put option for a stock, do I need to actually own the stock in order to sell it at the strike price?

Option Strike Price and Stock Split? if a stock price split before this option expires will the strike price for this option also be adjusted to whatever the split ratio is??

Use a call or a put option, strike price? Hi, I am trying to learn about trading standard options- calls/puts. I am unsure of which ot use in what situation. I want to use options to catch daily swings. Example: I wanted to buy an option on Google when it hit around 500 a share the other day because I knew it was going to drop. I just joined Tradeking.com to use for options. I could choose a call or put and at several different strike prices. Which should I have used and at what strike price if I was shooting for a downturn in the stock price?

Strike price in options? Lets say a stock is trading at $1 and i buy calls for $0.10 with a strike price of $2.50 The day after I buy the stock doubles to $2. Does that mean i can sell and make a 10X profit even though it didn't reach the strike price? What would the difference be if the same thing happened but the strike price was $2? I should add that the stock doubles the same day... so that takes the time value away from the equation. Can't anyone just tell me the importance of the strike price.

Stock options question: duplicate quotes for same strike price? Hi, Have a look at BAC Jan 2010 options: http://finance.yahoo.com/q/op?s=BAC&m=2010-01 For every strike price you can see 2 quotes. For example, S:2.50, there's on quote at 0.89 and another at 11.85. What's the difference between those 2 quotes? Thanks

Stock warrants STRIKE PRICE? Can someone explain what a stock warrant STRIKE PRICE is? I am looking at various stock charts for different stock warrants-where do i find Strike Prices for these things?

What kind of impact will we see on the price of new vehicles from the pending strike of the big 3 auto company What impact will there be on the price of new vehicles, both theirs and their competition? I didnt call them the big 3, that is just what they called them on the news