Order Types Explained: Market, Limit, GTC, Stop-Loss When entering or exiting a trade, there are many order types you can use. Keep in mind that while we use shares of stock in most of the examples, the same concepts apply to options. The primary order types are market orders, limit orders, good-til-canceled orders, and stop-loss orders. […]
Option Exercise and Assignment (Best Guide w/ Examples)
Options Exercise and Assignment Explained Buyers of options have the right to exercise their option at or before the option’s expiration. When an option is exercised, the option holder will buy (for exercised calls) or sell (for exercised puts) 100 shares of stock per contract at the option’s strike price. Conversely, when an option is exercised, […]
What is an Option’s Strike Price? | Options Trading Guide
What is an Option’s Strike Price? All options represent the right the buy (for call owners) or sell (for put owners) 100 shares of stock at a certain price, on or before the option’s expiration date. Traders who are short options have an obligation to sell (for call sellers) or buy (for put sellers) 100 […]
Options Expiration | When Do Options Expire?
Options Expiration | When Do Options Expire? Unlike shares of stock, options cannot be held forever. An option’s expiration date represents the final day that the option can be traded before settling to its final value. Standard options that are in-the-money (ITM) at expiration will expire to long or short shares of stock, or cash […]
Option Volume and Open Interest | Trading Concept Guide
Option Volume & Open Interest Explained One of the things every options trader should do before entering a position is gauge the amount of trading activity in the options they wish to trade. Failing to run a quick liquidity check can leave an options trader stranded in a position, forced to exit at an unfavorable […]
The Bid-Ask Spread (Options Trading Guide)
The Bid-Ask Spread Explained In this guide, you’re going to learn about the bid-ask spread, which is a crucial liquidity metric that should be examined before trading any stock or option. If you’d like, you can skip to a particular section by clicking on the section title. Before trading any product in the market, it’s crucial […]