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by Das Brain

I recently sold or closed my position on some Yahoo options that I purchased.
Let’s examine and learn from this option trade. I purchased on November 16th of 2006 two contracts of the YHOO Jan. 2008 $25 Call options, so basically I bought this option call contract in anticipation that Yahoo stock will hit the strike price of $25 by January 2008.

by Das Brain

Part 4 How Do I Trade Call Option Contracts?

In part 2 and part 3 of “Intro To Option Trading”, you can see that you can trade options just like stocks, which is buying low and selling high the option contracts themselves. Another term on this is called making money from the spread or the difference in the premium values.

Before I move on to the “Intro To Option Trading – Part 4″ here is a glossary of the option trading terms that we have covered so far. I have tried to keep the language as simple and less technical as I can, so it will help individuals who are new to options trading.

by Das Brain

What are put option contracts?

This is going to be a more general description of what put option contracts are. First of all, let’s talk about what is common amongst all option contracts whether they are calls or puts. All option contracts you purchase have a strike price and expiration date.

What is the strike price?

by Das Brain

Before I move on to the topic of “What are put option contracts?” which is Part 3 of this “Intro To Option Trading” series, I want to quickly write about how to read option quotes for a particular underlying stock or equity, by knowing how to read the quotes you will get better idea of what to look for when buying and selling option contracts.

by Das Brain

What are call option contracts?

This is going to be a more general description of what call contracts are. First of all, let’s talk about what is common amongst all option contracts whether they are calls or puts. All option contracts you purchase have a strike price and expiration date.

What is the strike price?

by Das Brain

This is just an introduction to trading option contracts.

First of all what the heck is an option contract?

An option is a contract which gives you the right to buy or sell a particular stock or equity. The stock or equity is known as the option’s underlying instrument. For stock or equity options, the underlying instrument is a stock, exchange-traded fund (ETF), or similar product. The contract itself sets a specific price, called the strike price, at which the contract may be exercised, or acted upon. The option contract also has an expiration date. When the option contract expires, it no longer has value and will no longer exists.