this is my first time hearing of options trading. correct me if im wrong but if i buy a call contract at $200 at a price of $40, how many shares does that give me? im going off of your example
Do I need to have the full value of the trade available in my account to exercise the option? For example: I would like to purchase Jan 2018 Put options with a $230 strike price at a cost of 30$, and I would like to purchase 1 contract. 30$ x 1 x 100 = $3000 for the cost of the trade . If the price drops down to 200$ and I want to exercise my option, do I need to have the funds in my account to cover the cost of the trade? $200 x 1 x 100 = $20,000 value?
you are the smartest guy in the room.
Thank you, you did a great job.
The price of the contract is $200 because the buyer/seller is paying a premium of $2 per share?
Correct Martin
Thank you Option Alpha !!
this is my first time hearing of options trading. correct me if im wrong but if i buy a call contract at $200 at a price of $40, how many shares does that give me? im going off of your example
It doesn't give you shares it lets you control shares - 1 contract is usually 100 shares.
can you day trade options? and is there a limitation on how many times you can sell/ close a position? (like the 3 day trade rule in stocks)
You can but it's not suggested and there are account limitations on it.
Very well explained! Thank you!
Glad it helped!
thank you so much! this helps a lot
Thank you!!!
great explanation !! got basics cleared
good way to explain buy to open and sell to close!
How much taxes do you pay to the irs for trading ?
Here's a post we just did on taxes: optionalpha.com/tax-treatments-options-59456.html
thanks, looking forward to the selling aspect
thanks
Do I need to have the full value of the trade available in my account to exercise the option?
For example: I would like to purchase Jan 2018 Put options with a $230 strike price at a cost of 30$, and I would like to purchase 1 contract.
30$ x 1 x 100 = $3000 for the cost of the trade . If the price drops down to 200$ and I want to exercise my option, do I need to have the funds in my account to cover the cost of the trade? $200 x 1 x 100 = $20,000 value?
Nope you do not - you'd only need that if you planned on holding the shares.
Option Alpha Great! Thanks so much.
you talked fast slow down nibody racing fir you but good explanation..