1. An options contract gives the buyer the right, but not the obligation, to buy or sell a specific asset (the underlying stock) at a specified price for a set period of time.
   
   
2. Almost all option contracts are 100 shares of the underlying security.
   
   
3. Options contracts contain the following information:
   • The underlying security. (Example: Coca-Cola, ticker symbol KO )
   • The size of options contract are fixed. All options contracts are 100 shares of the underlying security.
   • The contract's expiration. (Specified by the second to last letter in the option symbol.)
   • The contract's strike price. (Specified by the last letter in the option symbol symbol.)
     
     
4. Option Terminology...
   • A call option gives the buyer the right, but not the obligation to buy the underlying security at a specific price for a specified time. The seller of a call option has the underlying security should the buyer exercise his option to buy.
   • A put option gives the buyer the right, but not the obligation, to sell an underlying security at a specific price for a specified time. The seller of a put option has the obligation to buy the underlying security should the buyer chose to exercise his option to sell.
   • The premium is the price at which the contract trades. The premium is the price of the option and is paid by the buyer to the writer, or seller, of the option. In return, the writer of the call option is obligated to deliver the security to an option buyer if the call is exercised or buy the underlying security of the put is exercised. The writer keeps the premium whether or not the option is exercised.
   • The strike, or exercise price of an option is the specified share price at which the shares of stock can be bought or sold by the buyer if he exercises the right to buy (in the case of a call) or sell (in the case of a put).
   • When the price of the underlying security is equal to the strike price, an option is at-the-money.
   • A call option is in-the-money if the strike price is less than the market price of the underlying security. A put option is in-the-money if the strike price is greater than the market price of the underlying security.
   • A call option is out-of-the-money if the strike price is greater than the market price of the underlying security. A put option is out-of-the-money if the strike price is less than the market price of the underlying security.
     
     
5. American-styleis an option contract that can be exercised at any time between the date of purchase and the expiration date. Most exchange traded options are American-style options. European-style is an option contract that can only be exercised on the expiration date.
   
   
6. The Intrinsic value is the immediate value. For e.g. if you purchased an IBM Oct 100 call at $7 when the price is $105 per share, the contract would have an intrinsic value of $5. If the stock declined in value below $100 it would have no intrinsic value. Options that have no intrinsic value are out-of-the-money.
   
   
7. Time Value reflects the probability the option will gain in intrinsic value or become profitable to exercise before it expires.
   
   
8. You can trade any options available in real-life, as long as the contract has trading volume.
   
   
9. Once you decide on the stock you want to trade options on, and have its correct ticker symbol, go to the Option Symbol Lookup link in the Research Page, or CLICK HERE to go directly to the Option Symbol Lookup Page. Remember that when looking up option symbols on this page, drop the last hyphen (-) and last letter (E, A, X, P). This last letter merely designates the exchange that the option was traded on. Use the chart below to determine the contract's expiration and strike price.
   
   

   EXPIRATION MONTH CODES					STRIKE PRICE CODES
   Month	Calls	Puts			Strike	Code	Strike	Code
   January	A	M			5	A	65	M
   February	B	N			10	B	70	N
   March	C	O			15	C	75	O
   April	D	P			20	D	80	P
   May	E	Q			25	E	85	Q
   June	F	R			30	F	90	R
   July	G	S			35	G	95	S
   August	H	T			40	H	100	T
   September	I	U			45	I	7.5	U
   October	J	V			50	J	12.5	V
   November	K	W			55	K	17.5	W
   December	L	X			60	L	22.5	X

   
   
10. Once you have the correct ticker symbol for the contract, you can get a quote on the STOCK-TRAK quote page. (Make sure that you are entering the symbol in the right format. (Example: A Coca-Cola December 55 Call would be ticker symbol KO-LK. This would be entered in the quote page as KOLK, with no spaces, hyphens, etc.
    
    
11. Our brokers are standing by at 1-800-786-8725 to fill these orders for you.
    
    
12. One of the trading rules at Stock-Trak is that you can only trade half of the current volume. If you still are experiencing difficulties please call our toll-free number 1-800-786-8725. Our brokers will gladly assist you in closing out this position at a recent Bid/Ask price.
    
    
13. Options contracts expire at close of the 3rd Friday of each month, as specified by the options contract.
    
    
14. Multiply the (contract quote) x (contract size).This will give you the contract price (most option contracts are 100 shares of the underlying security).
    
    
15. Multiply the (contract quote) x (contract size) at the time of purchase. This will give you the contract price at the time you bought the contract.
    
    Then multiply the (contract quote) x (contract size) at time of sale. This will give you the contract price at the time you sold the contract.
    
    The difference in the two above calculations is the profit/loss per contract.
    
    If you traded multiple contracts, you need to multiply the number of contracts into the equations above. This will give you total profit/loss for a trade involving multiple contracts.

If you still have questions about Options please feel free to contact us at 1-800-786-8725 or visit the CBOE Educational Tools