Options Trading Tutorial

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.

Public Comments

1. Multiple option symbols on the same stock at the same strike price indicates one was sold as a leap and was at one point a long term option.
2. For any security where options are offered, for the same expiration month and strike price, there is only call or put. Call is the right to buy shares and put is the right to sell shares. You can long (buy) or short (sell) either call or put, depending on if you are bullish or bearish.
3. Most securities have 3 or more expiration cycles. An expiration is always on the third friday of the stated expiration. For example Apple June Call expires on June 19. Depending on what you want to accomplish you may use a June or Jan 2010 option. If you think the Apple will reach $200 sometime before the end of the year then you should pick a Jan 2010 option. However if you think Apple will reach $200 something before July 4 then pick a July option. The closest expiration month options are the cheapest while further away months are more expense. Because you are buying time. You should visit some of the websites below to learn more about options and how it can be used in different ways.
4. I assume you are talking about the same underlying and the same expiration date. If so, that means that one of the options is an adjusted option. You can look up option adjustments on the web. If the option is traded on the CBOE you can find the adjustment at http://www.cboe.com/tradtool/contracts.aspx A more comprehensive source for options adjustments is at http://www.optionsclearing.com/market/infomemos/info_memos_form.jsp ----- You also need to be aware that for some stocks/indexes there are weekly, quarterly and/or binary (FRO) options. Depending upon your source for quotes these options may appear in the same montage as regular options, causing confusion. For more information on weekly options see http://www.cboe.com/micro/weeklys/introduction.aspx For more information on quarterly options see http://www.cboe.com/micro/quarterly/introduction.aspx For more information on binary options see http://www.cboe.com/micro/binaries/introduction.aspx