Conclusion and Resources

We hope this tutorial has given you some insight into the world of options. Once again, we must emphasize that options are not for all investors. Options are sophisticated trading tools that can be dangerous if you don't educate yourself before using them. Please use this tutorial as it was intended–as a starting point to learning more about options.

Let's recap:

• An option is a contract giving the buyer the right but not the obligation to buy or sell an underlying asset at a specific price on or before a certain date.
• Options are derivatives because they derive their value from an underlying asset.
• A call gives the holder the right to buy an underlying asset at a certain price within a specific period of time.
• A put gives the holder the right to sell an underlying asset at a certain price within a specific period of time.
• There are four types of participants in options markets: buyers of calls, sellers of calls, buyers of puts, and sellers of puts.
• Buyers are often referred to as holders and sellers are also referred to as writers.
• The price at which an underlying stock can be purchased or sold is called the strike price (or exercise price).
• The total cost of an option is called the premium, which is determined by factors including the stock price, strike price, volatility and time remaining until expiration.
• A stock option contract represents 100 shares of the underlying stock.
• Investors use options both to speculate and to hedge risk.
• Employee stock options are different from listed options because they are a contract between the company and the holder. Employee stock options do not involve any third parties.
• The two main exercise types of options are American and European.
• Long term options are known as LEAPS.

Also See

• List of our upcoming options seminars NOTE - This link will open in a new tab.
• Subscribe to our mailing list and receive email alerts of upcoming seminars NOTE - This link will open in a new tab.
• "Writing Covered Calls To Set a Stock's Selling Price"
• "Protective Puts As a Form of Insurance"
• "In-the-Money, At-the-Money or Out-of-the-Money Calls?"

Option Strategy Fact Sheets from the Montreal Exchange NOTE - This link will open in a new tab.:

• Buying Call Options Instead of Buying Stocks NOTE - This link will open in a new tab.
• Buying Call Options as Protection for Future Purchases NOTE - This link will open in a new tab.
• Buying Call Options to Hedge a Short Sale (Protective Calls) NOTE - This link will open in a new tab.
• Writing Covered Call Options NOTE - This link will open in a new tab.
• Buying Put Options Instead of Short Selling Stocks NOTE - This link will open in a new tab.
• Buying Put Options as an Insurance Policy (Protective Puts) NOTE - This link will open in a new tab.
• Writing Secured Put Options NOTE - This link will open in a new tab.
• Writing Covered Straddles NOTE - This link will open in a new tab.
• Long Straddle (Straddle Buying) NOTE - This link will open in a new tab.
• Short Straddle (Straddle Writing) NOTE - This link will open in a new tab.
• Bear Call Spread (Credit Call Spread or Vertical Spread) NOTE - This link will open in a new tab.
• Bull Call Spread (Debit Call Spread or Vertical Spread) NOTE - This link will open in a new tab.
• Bear Put Spread (Debit Put Spread or Vertical Spread) NOTE - This link will open in a new tab.
• Bull Put Spread (Credit Put Spread or Vertical Spread) NOTE - This link will open in a new tab.
• Repair Strategy NOTE - This link will open in a new tab.
• Collar NOTE - This link will open in a new tab.