Option Basics: -Options are contracts -You pay a premium for them -You are able to buy or sell stock -1 option = 100 shares -They expire the third Friday of the month you purchase them for -Strike price = expiration price -You pay a premium -The option gets traded and sold versus the stock -Most people just trade the contracts Example: -Think of options like buying a house -You find a house that you like in an area where the houses are selling for $150k. You knock on the door and ask to buy the house. You are willing to give $10k up front if the house is sold to you within 6 months for $200k. -It is a win-win situation. -The homeowner gets the $10k and you get the option to purchase the house in the future and you can do research to check if the area is actually developing. -You have the right, but not the obligation to purchase the house. You pay $10k in order to have the option to buy it. -If someone gave the homeowner a higher bid, the homeowner would not be able to sell the house because you have the legal right to buy it in the future for $200k. -The homeowner would have to buy out the contract with you before selling the house for $300k. Types of Options: 1. Call - You are expecting the stock to go up 2. Put - You are expecting the stock to go down ★ SUBSCRIBE TO MY YOUTUBE: ★ http://bit.ly/addtradersfly ★ ABOUT TRADERSFLY ★ TradersFly is a place where I enjoy sharing my knowledge and experience about the stock market, trading, and investing. Stock trading can be a brutal industry especially if you are new. Watch my free educational training videos to avoid making large mistakes and to just continue to get better. Stock trading and investing is a long journey - it doesn't happen overnight. If you are interested to share some insight or contribute to the community we'd love to have you subscribe and join us! STOCK TRADING COURSES: -- http://tradersfly.com/courses/ STOCK TRADING BOOKS: -- http://tradersfly.com/books/ WEBSITES: -- http://rise2learn.com -- http://criticalcharts.com -- http://investinghelpdesk.com -- http://tradersfly.com -- http://backstageincome.com -- http://sashaevdakov.com SOCIAL MEDIA: -- http://twitter.com/criticalcharts/ -- http://facebook.com/criticalcharts/ MY YOUTUBE CHANNELS: -- TradersFly: http://bit.ly/tradersfly -- BackstageIncome: http://bit.ly/backstageincome