Option Pricing

is a terminology used to describe a series of terms that determine the value of an option. In the next couple of posts I will give you those terms and why they are important to option pricing.

Stock Options Chain

On the Right is a picture of a stock option chain. A stock option chain is a list of options that you can buy or sell. As you can see at the top of the page is stock symbol.. AAPL which is Apple, Inc. Next you see below the Stock symbol is a drop down box of expiration dates of when the options expire. Each option, which have their own symbols are separated by Calls and Puts. In the middle is the strike price of each symbol (strike price will be my next post). Next to the symbols is a list of the BID & ASK for each symbol. The bid & ask is the cost to buy or sell each option. The bid would be the amount would sell the option for, and the ask would be the cost to buy it.

Call Option definition

an agreement that gives an investor the right (but not the obligation) to buy a stock bond commodity or other instruments at a specified price within a specified time period.... investopedia.com
A call options is a contract you buy or sell that is affilated with the underlying stock when you think the underline stock is going up.... remember the option expires every third Friday of the month.