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MODULE 1: OPTIONS 101
OPTIONS 101
- When I buy/sell an option, am I stuck with it until expiration?
- How can I sell an option without owning it first?
- Can I sell a single leg option without owning shares of the stock?
- Do options chains across all websites/brokerages (TOS, Fidelity etc) have the same info/pricing?
- Why should I care about volume and open interest?
- Is it possible to trade an options contract for less than 100 shares?
- Are DTE calculated as calendar days or trading days?
- Can you still trade the option on the actual expiry date?
- What should I be aware of when trading options on individual stocks (AAPL, AMZN, etc) vs. ETFs and Index options (QQQ, SPX etc)?
- Who is responsible for holding the buyer and seller of an option contract accountable?
- If I’m “writing” the option, am I selling the option?
- If I’m “holding” the option, am I buying the option?
- Who decides the amount of strikes available on the option chain? (ex: $1 increments vs. $5 increments)
- If I BTO a call, do I need enough money in my account to buy 100 shares (aka exercise my right) in order to profit from my option trade?
- What happens from the perspective of your counterparty (buyer-seller) when you close your option early?
- How are the bid and ask prices being derived on the options chain?
- Are BTO/STO/BTC/STC different ways of exiting/closing a trade early?
- Can you walk me through how to calculate P&L for a call option buyer where the option ends OTM & ATM?
- What is selling a naked call? Is it risky?