SPY (S&P 500 Index Tracking Stock) - SPDRs - Spider - Options Trading and uncovered options

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Information Corner:

Why Trade Index Options - Less uncertainty: The key reason we trade index options rather than options on individual stocks is that price and volume fluctuations are much higher for a particular stock than they are for an index. Stocks often react wildly to unpredictable events, such as news, rumors...

Expiration Date - At the end of the expiration date, all those call options whose strike prices are higher than the price of the underlying stock or index will be worthless...

Start To Trade - Placing an options order is very similar to placing an order for a stock. If you use a live broker, call your brokerage firm and tell them which option you want to buy...

Options Trading

Descriptionoptions trading, shares, price, company, security, qqq, spystrike, call, put, premium:

An option contract that gives the holder the right, but not the obligation, to buy 100 shares of an underlying security within a certain time frame, at a certain price (the "strike price") is a "call option" (or a "call). The concept is like leasing a particular car. You have the right to buy this car at the end of the lease term, but instead of paying the whole premium upfront, as in buying an option, you pay the premium (in monthly installments) to the financing company. Your lease expires at the end of the term, and like with an option, you may exercise it, (buy the car or buy the stock), or simply let it expire (give back the car or do nothing on the options side.) That is how simple it is.

The opposite of a call is a "put option" (or a "put"). A put gives you the right to sell 100 shares of an underlying security within a certain time frame, but not an obligation, at a certain price (the "strike price"). You are guaranteed a sale at the predetermined strike price if the security falls below the strike price.

The premium for that option will be lower , when there is less time remaining until an option expires. For example, the premium for an option that expires in a month would be lower that the premium for an option that expires in two months. If you would want a downside protection (by buying a put) for an infinite period of time, the premium of such a put option would equal the price of the security itself.

Information Corner:

Market Timing - We trade options based on market timing principles. This means we analyze past trends in options volume and options cash volume in order to generate an accurate forecast of the probable future market trends...

Options Basics - Purchasing an option gives the buyer the right, but not the obligation, to buy or sell a specific amount of an underlying security at a specific price within a specified time period...