Brokerage accounts options trading put called


With a complex strategy involving multiple parts legs , a net debit transaction is one in which the total cash amount paid is greater than the total cash amount received. The exercise or assignment of an option contract before its expiration. This is a feature of American-style options that may be exercised or assigned at any time before they expire. A contract that gives its buyer owner the right, but not the obligation, to either buy or sell shares of a specific underlying stock or exchange-traded fund ETF at a specific price strike or exercise price per share, at any time before the contract expires.

With a complex strategy involving multiple parts legs , an even money transaction results when the total cash amount received is the same as the total cash amount paid. A security that represents shares of ownership in a fund or investment trust that holds a basket collection of specific component stocks. ETF shares are listed and traded on securities exchanges just like stock, and so may be bought and sold throughout the trading day.

If you buy stock before the ex-dividend date, you will be eligible to receive the upcoming dividend payment. If you buy stock on the ex-date or afterwards, you will not receive the dividend. To employ the rights an equity option contract conveys to its buyer to either buy in the case of a call or sell in the case of a put shares of the underlying security at the strike price per share at any time before the contract expires.

A term of any equity option contract, it is the price per share at which shares of stock will change hands after an option is exercised or assigned.

The day on which an option contract literally expires and ceases to exist. For equity options, this is the Saturday following the third Friday of the expiration month. The last day on which expiring equity options trade and may be exercised is the business day prior to the expiration date, or generally the third Friday of the month. If the option is out-of-the-money, the extrinsic value is equal to the entire premium.

A measurement of the actual observed volatility of a specific stock over a given period of time in the past, such as a month, quarter or year. Implied volatility for any option can only be determined via an option pricing model. An equity call contract is in-the-money when its strike price is less than the current underlying stock price. An equity put contract is in-the-money when its strike price is greater than the current underlying stock price.

Equity LEAPS calls and puts can have expirations up to three years into the future and expire in January of their expiration years. Instead of entering one order to establish all parts of a complex position simultaneously, one part is executed with the hope of establishing the other part s later at a better price. With respect to stock prices over a period of time, a lognormal distribution of daily price changes represents not the actual dollar amount of each change, but instead the logarithms of each change.

So in a sense a lognormal distribution could be considered to have a bullish bias. A position resulting from the opening purchase of a call or put contract and held owned in a brokerage account. Shares of stock that are purchased and held in a brokerage account and which represent an equity interest in the company that issued the shares.

For a data set, the mean is the sum of the observations divided by the number of observations. The mean is often quoted along with the standard deviation: One of the most familiar mathematical distributions, it is a set of random observed numbers or closing stock prices whose distribution is symmetrical around the mean or average number.

Since this a symmetrical distribution, when the numbers represent daily stock price changes, for every possible change to the upside there must be an equal price change to the downside.

Cash-secured naked put writing. Sell a put option on a stock you want to own, choosing a strike price that represents the price you are willing to pay for stock. You collect a cash premium in return for accepting an obligation to buy stock by paying the strike price.

A collar is a covered call position, with the addition of a put. The put acts as an insurance policy and limit losses to a minimal but adjustable amount.

The purchase of one call option, and the sale of another. Or the purchase of one put option, and the sale of another. Both options have the same expiration. Thus, the higher priced option is sold, and a less expensive, further out of the money option is bought. Cash-secured naked put writing. Sell a put option on a stock you want to own, choosing a strike price that represents the price you are willing to pay for stock.

You collect a cash premium in return for accepting an obligation to buy stock by paying the strike price. A collar is a covered call position, with the addition of a put. The put acts as an insurance policy and limit losses to a minimal but adjustable amount.

The purchase of one call option, and the sale of another. Or the purchase of one put option, and the sale of another.

Both options have the same expiration. Thus, the higher priced option is sold, and a less expensive, further out of the money option is bought.