Employee Stock Options

Employee stock options can dilute the value of the stock of a company. The current example is the recent initial public offering by LinkedIn. The company went public last week. A concern going into the first day was that LinkedIn has a large number of employee stock options outstanding. This is common in Silicon Valley [...]

When Do Options Expire?

A useful piece of information in knowing how to trade stock options is knowing when do options expire. This is basically necessary for options trading as an expired option is a worthless option. When do options expire depends to a degree on the type of option. Regular options expire on the Saturday following the third [...]

What Are Options on Interest Rates?

Interest rate options are cash settled options on the yield of US Treasuries. What are options on interest rates good for and who trades them? They are European-style in that they are only settled on their expiration date although they can be bought and sold throughout the duration of the contract. Those buying interest rate [...]

What Is the Difference between Futures Trading and Options Trading?

Both futures trading and options trading contracts allow the trader to speculate on the future price of stocks, commodities, and foreign currencies. But, what is the difference between futures trading and options trading? The basic difference is the matter of right versus obligation. A buyer of an options contract purchases the right but not the [...]

How Do Binary Options Work?

A binary option is a somewhat simplified version of options trading. How to binary options work? In trading either American or European style standard options a trader purchases the right to either buy or sell 100 shares of a stock, which he will do if the stock price moves as he anticipates. He is under [...]

Stock and Forex Options

As the US economy shows signs of a sustained recovery, debt concerns heighten in the European Union. During the last year both stock and Forex options provided speculators with a means of profiting from the volatility inherent in the post recession economic world. International businesses, that typically use options to hedge currency risk, continue to [...]

GM Options

After GM’s IPO has returned the auto company to the NYSE the company’s stock will soon be available for options trading. United States options exchanges will be listing call and put GM options as of November 29. Current expectation on the street is that December $35 GM options calls will be around $1.60 bid price [...]

Trading Oil Options

As hopes for a stronger world economy increase trading oil options could become increasingly profitable. In trading oil options, or trading any options, profitability is linked to price changes in the underlying equity. In this case profit in trading oil options is linked to the price of oil and to the [...]

How Do Options Work?

It is possible to buy and sell options on various underlying equities on various exchanges such as the CBOE. There are options on equity securities, index options, debt options, foreign currency options. How do options work in these different arenas? In each case the options trader will either buy or sell [...]

How to Buy Stock Options

Learning how to buy stock options is a necessity for options trading. All options traders must read the document, “Characteristics and Risks of Standardized Options,” which is also known as the “Options Disclosure Document.” This publication of the Options Clearing Corporation provides detailed information as to how to trade options, [...]

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