Parts of the Whole, the Listed Option
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Using stock options, a listed option has four major
segments:
I. The RIGHT—to buy or sell 100 shares of a specific stock
II. The EXPIRATION DATE—the date that your right ends
or expires
III. The STRIKE PRICE—the price at which you can buy or
sell
IV. The OPTION PRICE—the price you paid for the right to
buy or sell 100 shares at an exercise (strike) price until
an expiration date
This is an example of a listed call option:
IBM Jul 60 (at) 3
Let’s look at each part.
Part I: “IBM”—This represents the stock name. This option
is the right to buy 100 shares of IBM Corporation common
stock.
Part II: “Jul”—This represents the time when your right expires.
This is the expiration date which falls on the Saturday
immediately following the third Friday of the expiration
month. In this case, it is the month of July.
Part III: “60”—This represents the exercise price at which
the IBM stock can be purchased. This price is also referred
to as the strike price.”
Part IV: “(at) 3”—This refers to the last transaction price at
which this option was bought or sold with one qualifying
point. The 3 represents $3, the price to buy one share of
stock. All listed options carry the right to buy or sell 100
shares of stock. Therefore, always multiply the price by 100
to get the true price of the option. In this case, the true
price is $300. ($3 x 100 = $300).
Using stock options, a listed option has four major
segments:
I. The RIGHT—to buy or sell 100 shares of a specific stock
II. The EXPIRATION DATE—the date that your right ends
or expires
III. The STRIKE PRICE—the price at which you can buy or
sell
IV. The OPTION PRICE—the price you paid for the right to
buy or sell 100 shares at an exercise (strike) price until
an expiration date
This is an example of a listed call option:
IBM Jul 60 (at) 3
Let’s look at each part.
Part I: “IBM”—This represents the stock name. This option
is the right to buy 100 shares of IBM Corporation common
stock.
Part II: “Jul”—This represents the time when your right expires.
This is the expiration date which falls on the Saturday
immediately following the third Friday of the expiration
month. In this case, it is the month of July.
Part III: “60”—This represents the exercise price at which
the IBM stock can be purchased. This price is also referred
to as the strike price.”
Part IV: “(at) 3”—This refers to the last transaction price at
which this option was bought or sold with one qualifying
point. The 3 represents $3, the price to buy one share of
stock. All listed options carry the right to buy or sell 100
shares of stock. Therefore, always multiply the price by 100
to get the true price of the option. In this case, the true
price is $300. ($3 x 100 = $300).