Stock stock options
This is similar to buying or short-selling a stock. Owning a call option gives you the right to buy stock.
What is a 'Stock Option'
This gives you a right to buy a company's stock at a set price within a certain period of time. If the market price of the stock rises above the price set in the option, you can buy the stock for the set price and immediately sell it for a profit in the market. Moreover, if the market price falls below the set price, the owner of the option does not have to buy the stock and only loses the cost of the premium paid for that option.
Options are different from trading stock in a company because investing in an option does not involve taking an ownership stake of a company. There are two types of options: Owning a call option gives you the right to buy stock.
If you sell a call option, you make money on the premium, but you promise to sell the stock if the option is exercised. Owning a put option gives you the right to sell the stock at an agreed upon price. By selling a put option, you make money on the premium, but you must promise to buy the stock if the put option is exercised. American options , which make up most of the public exchange-traded stock options, can be exercised any time between the date of purchase and the expiration date of the option.
Stock options normally represent shares of an underlying stock. A call is when the buyer has the right to purchase stock at a specified price before the option expires.
A put option is when the buyer has the right to sell stock at a specified price before expiration. The purchaser of a call option believes that the underlying stock will increase in price, while the seller of the option thinks otherwise. The option holder has the benefit of purchasing the stock at a discount from its current market value if the stock price increases prior to expiration.
The amount paid for the option is the most the option buyer can lose. If the underlying stock loses value prior to expiration, the option holder makes money. In this case, if the stock goes up instead, the cost of the option is the most the option buyer can lose. The strike price is the predetermined price at which the underlying stock can be bought or sold.
Time value and volatility also play a significant role in the price of an option. High volatility increases the cost of an option, as does the amount of time until expiry.
Since more volatility and more time mean an increased chance the price could move through the strike price, this will make the options more expensive than options with lower volatility and less time till expiration.
While some trader buy options, other need to write them. The writer is on the opposite side of the trade as the buyer. Under certain provisions of the stock plan and grant agreement, such as a change in employment status, the expiration date may be accelerated. You can view a history of all transactions for your stock option plan for the past 10, 30, 60, 90, or days. Transactions appear in reverse chronological order, but you can also sort the list of transactions by transaction type, grant ID, grant date, or quantity.
You can view details pertaining to accepted and declined grants. You can also view your plan document and grant agreement when you accept or decline an unaccepted grant. Your plan information and documents are in PDF format. For stock options, requests are open exercises. You can see all open exercises, as well as exercises which are pending cancellation.
Details include quantity, symbol, grant ID, grant date, grant type, fair market value description, and other request details. If an exercise request is still open, you can submit a request to cancel by clicking Attempt to Cancel next to the request on the Pending Exercises page. The Confirmation page displays a unique confirmation number for your cancellation request. Note that the confirmation number does not indicate that your exercise request has actually been canceled, only that a cancellation request has been placed.
Your cancellation request is subject to prevailing market conditions and prior execution of your original request. To check the status of your cancellation request, return to the Pending Exercises page.
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