option
A contract that gives you the right, but not the duty, to buy or sell an investment at a set price on or before a certain date.
Where it is explained in full
Options from the beginning: calls, puts, and the Greeks in plain words. What a contract actually is, what the numbers on the screen mean, and why an option's value before expiration is not the same as its payoff at expiration.
Workplace plans: the 401(k), the 403(b), and the TSP, from the first paycheck to the last. Everything a person needs to open one, fill it, hold the right things in it, avoid the traps, and carry it with them when they leave. Long on purpose, so that one page is enough.
Covered calls: the whole position, not just the premium. Selling a call against stock you own puts money in your pocket today and gives something up tomorrow. Look at both halves, or the premium will look like free money when it is not.
A definition says what a thing is; it never says whether it fits you. The guides explain how it works and name the professional who confirms it for a particular person. The No Advice Disclosure.
Words beside it
- Call option
The right, not the obligation, to buy 100 shares at a set price by a set date.
- Credit spread (options)
Selling one option and buying another further out, collecting a net premium with a capped loss.
- Debit spread (options)
Buying one option and selling another further out, paying a net premium for a capped gain and capped loss.
- Exercise (options)
Using the right an option gives you.
- Intrinsic value (options)
The amount an option is in the money: for a call, stock price minus strike, if positive.
- Options chain
The list of every available contract for a stock, by expiration and strike.
- Premium (options)
The price of an option, per share, times 100 per contract.
- Put option
The right, not the obligation, to sell 100 shares at a set price by a set date.
Ask about option
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