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A stock option is a contract that gives the buyer the right, but not the obligation, to buy or sell (depending on what kind you got--calls let you buy, puts let you sell) stock at a certain price by a certain date.
A stock option has two values attached to it: the strike price and the premium. The premium is the money you have to pay to enter into the contract, and it's expressed per share even though these trade in units of 100 shares. So, if the premium on your option is 10 cents per share, you'll have to pay $10 to enter into the option contract.
The strike price is the amount the stock is going to sell for. In our option contract, the strike price is $5 per share, which means that if you decide to use, or "exercise," the contract you will have to pay $500--$5 per share x 100 shares. Okay so far?
Now, the idea behind these things is they allow you to buy stock for less than it's selling for on the "spot market," or sell it for more than it's selling for on the spot market. You have a call option, which allows you to buy 100 shares of stock for $5 per share. You paid a 10 cent per share premium, so if the stock price goes above $5.10 per share ($5 strike price plus 10 cents premium), it makes sense to exercise the option. If it stays below that price, it would cost you more to exercise the option than it would just to call a stockbroker and buy some stock, so you don't exercise the option.
The fun part: if you exercise the option you will pay $5 per share even if the stock has suddenly risen to $5000 per share. On the flipside, if you bought a put option you can sell your stock for $5 per share even if the company went out of business.
People who sell puts and calls have a different set of risk factors: they have to either supply stock to cover a call no matter how expensive it got, or buy it even if it went to zero.
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What are Cashless Stock Options?
Cashless stock options from your employer are an incentive for you to work harder. They are "giving" you stock in their company, which in turn makes you work harder to make more money.
Stock options used in accounting.?
I would think that you would include your stock options with your paper work for accounting so that they can get the actual numbers needed to do your taxes.
Where can my friend learn more about buy stock options?
There is so good supplement information about stock options here: http://canadianfinanceblog.com/how-stock-options-work/. There is also a good list regarding the subject here: http://gigaom.com/2011/06/05/5-mistakes-you-cant-afford-to-make-with-stock-options/.
Does Canada do investment stock options?
Other countries do investment stock options. Canada is one of them and among the easiest for English speakers to work with as we share a common language.
What is the purpose of free stock options?
Free stock options are often in the form of employee stock options, where an employee is offered stock in the company as a form of non-monetary compensation.
Are there several ameritrade stock options?
There are many ameritrade stock options. They will provide you with their various stock options through there site on the internet. Visit it for more information.
Where can one find information on stock trade options?
One can find information on stock trade options by going to a local stock broker. They will have great advice on everything about the stock trade options.
What are the UK's stock options?
To learn more about where UK stock options are you will have to check UK stock options on Wikipedia to see where and what they are so you can find out more information on where to find them
What is Exercise of Stock Options?
Stock options is when you have a right to buy (or sell, but most commonly buy) a stock at a predetermined price.Exercising a stock option means that you use it: You buy the stocks at the agreed price, and the options expire as you spent them on the stock purchase.
Where can you go to get stock options explained to you?
There are a number of sites where one can get stock options explained. One of these options includes videos that are available on YouTube under the topic of 'Explaining Stock Options Trading'. Another option is 'The Options Guide' website.
Where can I find advice on best stock options?
There are a lot of people that need advice with stock options. There are a few options you can either chat with an online representative or you can get in contact with a stock adviser.
What is the price of a ford stock option for the public?
Any stock website that gives you the price of the stock itself will have a link to the price of the options. For every stock there are many options to choose from ranging in price and date. Study Options Weekly before trading options.
