What Are Options?

Stock Option
- A stock option is a contract between two parties (buyer & seller), giving the buyer the right (but not the obligation) to buy/sell 100 shares of the underlying stock at a predetermined price.

Strike Price
- The strike price is the price that the underlying stock is to be bought or sold when the option is exercised.

Expiration Date
- Every option has an expiration date. Once the option expires, the right to exercise no longer exists and the stock option becomes worthless. American style stock options expire on the third Friday of the expiration month. Some stock options have Weekly options, that expire every Friday.

Call
 - A call option gives the buyer a right to buy the underlying stock at the strike price. (Like going LONG on a stock)

 Put
- A put option gives the buyer a right to sell the underlying stock at the strike price. (Like going SHORT on a stock)