Stock options are considered as options having stocks as the fundamental instrument. Similar to all options, the stock options use several related phrases that are unique to options markets. Generally, strike Price (or Exercise Price) is the word mostly used to describe stock options. Strike Price is the fixed price at which the owner of an option can purchase (in the case of a call, known as ‘call option’) or sell (in the case of a put, ‘put option’) the underlying commodity.
The concept of Stock option trading was introduced in the 1970’s, and it became popular in 1980’s. However the market losses of 1990 caused a stop in this type of trading, the recent concept of electronic trading (online trading) made them again popular to the public.
The major risk coming with the stock options trading, the customer is obligated to trade in the strike price. To be clear, if a customer wish to purchase the underlying stocks, he must do it on the strike price though the actual market stock price is lesser than that. In same way, the customer needs to sell his stock at the strike price though the actual stock market price is far higher.
This information provided by Orient Financial Brokers (OFB), licensed and regulated by Central Bank of the UAE since 1997, to conduct brokerage in Foreign Exchange, Commodities and Money Markets. We offer a number of commodity futures including all main oil, grain and precious metal contracts. We offer all the main LIFFE and EUREX interest rate contracts, including Short Sterling, Gilt, Bund and Bobl. US and Far East contracts are available too.
OFB offers 24 hours internet on-line trading service to deal in thousands of financial instruments such as Commodities, Treasuries, Share CFDs, Stock Index CFDs, Foreign Exchange and Precious Metals through its principals.
Labels: call options, put option, Stock Index CFDs, Stock Option Trading