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Common options terms explained. Here are some of the most common options terms and definitions. American-style option. American-style options can be exercised at any time prior to the expiration date.
Prior to 2010, [1] standard equity option naming convention in North America, as used by the Options Clearing Corporation, was as follows: For example, an Apple Inc AAPL.O call option that would have expired in December 2007 at a $122.50 strike price would be displayed as APVLZ in old convention (AAPL071222C00122500 in new convention).
Triple witching hour: the last hour of the stock market trading session (3:00-4:00 P.M., New York City local Time) on the third Friday of every March, June, September, and December, when three kinds of securities expire - stock market index futures, stock market index options, and stock options. [15]
A call option on a stock index gives you the right to buy the index, and a put option on a stock index gives you the right to sell the index. Options on stock indexes are similar to exchange-traded funds (ETFs), the difference being that ETF values change throughout the day whereas the value on stock index options change at the end of each ...
Exchanges quote options prices in terms of the per-share price, not the total price you must pay to own the contract. For example, an option may be quoted at $0.75 on the exchange.
Trading options is generally more complicated than trading stocks, so you must know a few key things before diving in. If you want to trade options, be sure to avoid these common mistakes.