How stock options work?
155802
If you have stock options, you have the right to purchase stock at a set price. The price you'll pay is set by the Board of Directors (usually). If the company is pre-IPO, the price may be quite low. The hope is that when the company goes public, your stock will be worth more than the option price.\n\nThe vesting schedule sets forth the time and amount of stock you can purchase.
936425
Another possible reason is that the expiration date is different.  Let's say the stock is currently trading at $28 a share.  The December options will expire in two weeks - it's not likely to expire "in the money", so the spread is .05 - .10.  \n\nThe other options expire a long time from now, with the company in the midst of an upswing.  A year from now, the projected stock price is $37+ a share, according to the option value.\n\nEach option has its own ticker symbol, which contains the three digit symbol, then a letter that indicates the expiration month (A-L is call option, M-X is put option), then a letter that identifies the strike price.  You probably already know this, but just makin' sure.
1131514
Options,whether calls or puts are a net zero sum game.  This simply means that for every buyer there is a seller and vice versa.  Estimates say that 70% of all options expire worthless.  If that be the case (and it is) then 70% of all options value is credited to someones account. To answer the actual question, yes, you can make a lot of money selling both puts and calls but you will need to understand the principles behind the strategies and when to employ them. \nCheck out http://www.commoditytrader.ca they specialize in Options short selling
1187130
To my knowledge, they can't.  Stock options have nothing to do with inflating earnings.  If anything, they deflate the earnings statement b/c they now have to be expensed at issue (a provision of SOX).  If executives omit the options expense on the earnings report I think they're comitting faud.
879502
First of all, don't think your question is even right, but that's OK. This is option, not some software engineering - life cycle?\n\nWhen u said u paid $5 premium for a $10 call option, u mean the stock is currently trading at $10. If you exercise the call option u need to paid extra $1000 for the 100 shares of $10 stock xyz. You just paid $500 + $1000 = $1500 for 100 shrs  $10 stock means your  $1500 now becomes $1000 means you just lost $500.\n\nMy advice: Go to cboe.com, 1888options.com or buy the Mcmillan book and study...\n\nAnd by the way you remember don't use any broker that charge u more than $1 for 1 contract...\n\nGood luck!
1109544
Are we talking about stocks here? Oil, bonds, what? There are options on everything, including futures options.\n\nYes, these answers are way off. You didn't ask for the definition of a Put. \n\nThe seller could be anyone, yes, but generally it is a broker/dealer or floor trader or a hedger against stock ownership, like an institution or fund.\n\nOptions were designed as a hedging tool, so if used correctly, the seller would be someone who owns the underlying. Speculators selling options is a very risky business, so generally, he would be a professional with deep pockets. The less knowledgeable people get weeded out in a hurry.\n\nThe seller of the option hopes it will expire worthless. This is how he makes his money. Since 85% of all options expire worthless, his odds are pretty good, but the risk is still open-ended and enormous; not for the feint at heart.
599996
That depends on the nature of the option and whether it was ever exercised.  Most options come with a vesting schedule meaning that you need to work for the company for a certain amount of time before the option become usable (or vests.)
685607
Most online trading sites like Ameritrade etc, as well as exchanges like CBOE etc allow users to enter multi-legged Options like Bull Call Spreads (Buy lower Call Option and Sell Higher Call Option ). Many even quote the whole spread strategy. The Order is sent down to the exchange as a single atomic orders ( i.e. all legs of the Spread have to be executed or the order is cancelled ). Many exchanges also list Spreads via special symbols to allow exchange traded spreads. The market maker will take the other side of the spread. At expiration, the OCC (Option Clearing ), picks a random entity to exersise the options.
43009
An option is a contract, If you buy a "call" you have the right to buy a stock at the strike price, and seller is obligated if you "exercise" which means telling the seller you are buying the shares. \nFor Example\nYou buy 1 contract (100 options) of Microsoft for $1 which will cost you $100 and lets say the strike price is at 25. Let's say Microsft is at 24 the option "real value" of the option is worthless because you won't want to  buy it at 25 from the seller if you can buy it from the market for 24. Now if the stock reaches lets say 50, You have the right to buy 100 shares of MSFT at 25, and then sell them immideatly at 50. The real value per share is $25 so you would get 2,500 dollars back.\n\nPut options is the exact same thing, except you have the right to sell at the strike price, so If MSFT is at 15 and you have a put at 25, you have the right to buy the stock at 15 and then sell it at 25. (this transaction does not actually happen like this, but this is what makes it easy to understand).\n\nBad news about options, they expire. They have a date, which they would be worthless the day after expiration.\n\nAlso, you have an option to write, selling options on stocks you own is a way to reduce risk and possibly make free cash and increase yields if you know what you are doing. (that is what I do.)
400085
A stock option is an offer or promise by a company to another party to sell to the other party company stock at a price at or below street value. If the offer is made at a price that is below street value, the company can expect to loose money on the transaction whenever the sale occurs. This for accounting purposes is recorded as a loss to the company, and losses reduce the income of the company - and the loss/reduced income is recorded before the corporate taxes are paid, so the loss is pre-tax.\n\nYou accountants out there feel free to blow me out of the water, if I'm not right, but this is the way my accountant buddy explained it to me.
186960
I'm not sure what you are asking for, but I'll tell you the meaning of the options.\nLet's use as an option example Yahoo Strike 30 March and say trading at $.65 an option and you are going to buy/sell one contract\n\nBuy to open- Buy to open is to buy this option and for 1 contract you would pay $65 and $8 transaction fee. \n\nSell To Close- You can not do this first, you need to own and option first. So, if you bought the yahoo option and it is now worth $.9 You would sell it and make $90 $-8 transaction fee.\n\nNow what I think you are interested in is the opposite\n\nSell to open- means that you sell this option and you will recieve $65 in your account - transaction fee and you could do whatever you want with your money.\n\nBuy to close is simply to buy back your option. If you think the option will expire worthless and do not want to buyback, then you may not need to do this action. \n\nHope I was some help.\n\nALSO VERY IMPORTANT. If you have sold more than one option contract and it is likely to be exercised, buy back the option. Because buy back is only $7 +1.25(per contract) per transaction, but getting exercised is $8 per contract.
1068913
When you short a stock, you are borrowing shares from your brokerage company, who in turn usually borrows shares it is holding for customers. The shares are then sold. The brokerage firm gets the cash from the proceeds of the sale. Generally, the brokerage firm (not you, and not the clients from whom the shares were borrowed) invests these cash proceeds and keeps the interest on them. If you are a very big client (say a hedge fund) you might be able to cut a better deal.\n\nWhat you pay is: (1) commissions on the sale (2) commissions on the purchase when you close the sale and (3) any dividends paid on the stock while you are short.
268
Shorting a stock (or selling short) ideally works like this:\n\nWhen you think a stock is going to go down...\n1. You borrow shares of stock you don't own, typically from your broker.\n2. You sell those shares at today's price.\n3. You wait for the stock to go down.\n4. You buy the same number of shares back at a lower price.\n5. You return the borrowed shares.\n6. You pocket the difference between the buying and selling price.\nSteps 1 & 5 are actually done automatically when you issue a short sale order with a broker.\n\nThe advantage of shorting is that you can make money when stocks are going down.  (With a normal stock purchases, you only make money if the stock goes up.)\n\nThe disadvantage is that in theory, you could lose an unlimited amount of money.  For example, if the stock goes up to five times its original value, you've just lost four times your investment.  (With a regular stock purchase, the most you can lose is the amount you originally invested.)
582846
It means what is the underlying asset used to settle the contract.  So for a stock option that would usually be the cash stock (so GE stock to settle a GE Option).  Occasionally it might be the cash instead.
216049
Wow, their are a lot of confused people out there in regards to options.\n\nOptions are not like shares of a stock.  They do not have a fixed number of shares.  They have open interest.  Open interest tells you how many contracts are in existence.   Options are a contract between a buyer and a seller.  When you want to sell or buy an option contract, if someone is willing to take the other side of your trade than an option contract is created.  You can sell a call or buy a call and you can sell a put and buy a put.  Because of this, when you place your trade, you have to specify whether you are opening (creating a new contract) or closing (completing a contract).  \n\nThis is why you have to specify, lets say you are long 10 call contracts on XYZ and you want to sell them.  You would enter that as a sell to close and this would close out those contracts.  If you entered that trade as a sell to open, you would still be long the 10 calls of XYZ, and you would now also be short 10 calls of XYZ.  If you did not own XYZ stock, this new position would be naked calls with unlimited risk.\n\nIf you want more info on options click this link, http://www.cboe.com/LearnCenter/default.aspx\nThe link is to the Chicago Board of Options.  They have awesome materials and support.  I hope that helped.
306389
Try http://www.optionsxpress.com
404773
I don't trade stock options, nor do I have any expertise on the subject, but I enjoy trading prediction options on Cenimar.com. It gives you a little bit of a feel for how an options market works.