The Options & Futures Guide

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If you are new to options, this page can options call put tutorial used as a beginner tutorial, guiding you through the basic terms and concepts.

These are not only essential for successful options trading, but also needed for understanding more advanced topics such as option pricingvolatilityGreeksor option strategies. Overview of Basic Terms and Concepts — If you already know a bit about options, you can use this page as a checklist to make sure you understand all the fundamentals.

What Is an Option? Underlying Price — Three different prices often come up when discussing options. It is important to understand their differences and how they are related to each other.

Exercising Options and Expiration — When you hold an option, there are three ways for you to stop holding it: Intrinsic Value — Explaining the concept of intrinsic value, which is in fact not limited options call put tutorial options. When underlying options call put tutorial is at or below the strike price, intrinsic value is zero, because exercising the option would not get the stock cheaper than in the stock market.

Strike Price and Intrinsic Value of Put Options — Put option intrinsic value follows the same logic as calls, only the direction is reverse, beceause a put represents a right to sell, not buy, the underlying security. Option Intrinsic Value Formulas — A summary of call and put intrinsic value formulas. They are closely related to intrinsic value and the relationship between strike price and underlying price. They allow us to easily categorize options in three groups, with each having some shared characteristics when it comes to option premium, time value, and practical trading.

In the Money vs. At the Money Options: The latter is less simple to calculate, as it depends on a number of factors, such as time to expiration, volatility, or interest rates. Understanding time value and how it reacts to different factors is the key to profitable options trading. Putting it all options call put tutorial, the following two pages explain how call and put option prices are driven by changing intrinsic and time value:.

Terminology of Option Positions — There are four basic positions you can create with options: Option positions are often options call put tutorial to as long vs. It is important what these labels mean, as they are often source of confusion.

Directional Trades with Options — This page explains how you can use options to speculate on underlying price going up or down, just like you would do by trading the underlying stock itself. It turns out options have a number of advantages and differences compared to stock trading.

Understanding the basic concepts is really just the beginning. It is necessary, options call put tutorial far from enough for successful options trading. From here you can proceed to more advanced tutorials, which explaind option pricing, options call put tutorial Black-Scholes modeloption Greeksand option strategies.

This page provides some further clarification. Spot price is just another name for market price, i. If you don't agree with any part of this Agreement, please options call put tutorial the website now. All information is for educational purposes only and may be inaccurate, incomplete, outdated or plain wrong. Macroption is not liable for any damages resulting from using the content. No financial, investment or trading advice is given at any time.

Home Calculators Tutorials About Contact. Tutorial 1 Tutorial 2 Tutorial 3 Tutorial 4. Intrinsic Value Intrinsic Value — Explaining the concept of intrinsic value, which is in fact not limited to options. The following pages explain time options call put tutorial for different kinds of options in greater detail: What Next Understanding the basic concepts is really just the beginning.

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You can get a current list of these ultra liquid options by visiting. Daytraders rarely trade out of the front-month options, and most recently they have been looking at weekly options to trade in and out of. Weeklys are a one-week expiration product that expire on Fridays.

More information on weeklys can be found on the CBOE site.