Understanding Options

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You can apply for options trading on one of your existing accounts. Investors are responsible for their own investment decisions. Used under licence. All rights reserved. Options Basics.

Call Options

What are options? Options Contract: An options contract gives you the right to buy or sell a stock at a specific price by a specific date the expiry date. Premium: This is the price you pay or receive for an options contract. Strike Price also known as the Exercise Price : This is the price at which you can exercise the options contract. Expiration Date: Unlike purchasing stock, buying an options contract is generally a shorter term investment. Exercise: This means taking action on your options contract any time up to and including the expiry date American style.

At-the-money This means the strike price of an options contract and the stock price are the same. Types of Options There are two main classes of options - calls and puts. Seller: When you sell write a call option, you receive a "premium" but have the obligation to sell the underlying stock at a specific price strike price on or before a specific date expiry date , should you be assigned.

Buyer : When you buy a put option, you pay a "premium" to have the right — but not the obligation - to sell the underlying stock at a specific price strike price on or before a specific date expiry date.

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Therein lies the paradox. So, What Exactly is an Option, Anyway? And for you rookies, well, read on. Actually, options can be traded on several kinds of underlying securities. So feel free to substitute these terms to match your preferred style of trading. That period of time could be as short as a day or as long as a couple of years, depending on the option. The seller of the option contract has the obligation to take the opposite side of the trade if and when the owner exercises the right to buy or sell the asset.

When you buy a call, it gives you the right but not the obligation to buy a specific stock at a specific price per share within a specific time frame.


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When you buy a put, it gives you the right but not the obligation to sell a specific stock at a specific price per share within a specific time frame. Much of the time, individual calls and puts are not used as a standalone strategy. This term does not imply they are hard to understand.

Understanding Option Greeks

It has all the basics you need to start understanding options. If you are looking for basic knowledge, then this book is for you. It does not get too deep into all the technical stuff. Jul 15, Yates Buckley rated it really liked it Shelves: curious. Vert accessible introduction to stock options, the tone is perfectly balanced and the examplea are very clear, step by step. This is for someone that really knows nothing about options and wants to get a sense of the strategies.


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Nov 11, Ikai Lan rated it really liked it. Many people at my new company trade options. I've picked up a little via osmosis, but I figured reading this book would help me learn things faster. And it did.

Introduction to Options Pricing

Great primer on Options trading Excellent coverage of all I wanted to learn - from basics to advanced. Engaging writing style too, for otherwise dry topics. Jun 01, Tung Do rated it it was amazing. Great book on options trading's fundamentals. Oct 01, Patrick rated it really liked it. Will give you a basic understanding of options.

Good book to start out with on your journey to mastering options. Great read for anyone starting out with options trading. I especially enjoyed learning about the various kinds of spreads.

Understanding Put Options

Feb 17, Sherreka Burton rated it it was amazing Shelves: business , own , financial. Learned a lot, easy to read and not boring. Bought it to add to my personal library. Jun 18, Yushi Wei rated it it was amazing. Very useful book to get started on options with introduction to basics as well as brief mentioning of more advanced strategies. Looking forward to testing some of them out iRL. Easy to read An easy to read and understand source in option trading. It has more strategies than I will ever use but I welcomed the opportunity to learn about every one.

Apr 19, Alek rated it it was amazing. If you want to get involved with option trading, this is your book. Mar 05, Grace rated it it was amazing. The book contains detailed descriptions of options and step-by-step diagrams to explain how to execute and value them. Sincere clearly explains everything you need to know about options, which are a valuable tool either as a hedge for your investments or a standalone means to earn profits.

The book contains both introductory information and advanced strat From Top 12 Investment Books to Start Off Understanding Options by Michael Sincere is a must-read for anyone interested in trading options. The book contains both introductory information and advanced strategies for all levels of option traders. Options are complex financial instruments but Sincere explains them simply enough for any level of trader to understand.

This book would not have made this list in past years, but I believe options trading has become an important skill for all investors, which in my opinion warrants this book a place on our list. Understanding Options helped me understand the nature of options and how to trade them effectively, and I now trade them nearly as much as I do common stocks.

The Pro: Just as the author suggested, this book is easy to read and easy to understand, for someone like me who never touched option and who with very basic knowledge of the stock market. The Con: The author try to carefully stay away from using any math formula or diagrams, but I think some basic formula and diagrams can actually better explain the concepts. Instead, the author used a lot of wordy and repetitive examples.

In the beginning it is helpful but then it becomes tedious. I also hope The Pro: Just as the author suggested, this book is easy to read and easy to understand, for someone like me who never touched option and who with very basic knowledge of the stock market. I also hope the author could include some basics about how option pricing works. Lacking of any information about pricing make me doubt whether I have enough knowledge to start trading option after reading this book.

Read this book on Kindle as my first book for understanding options. In Read this book on Kindle as my first book for understanding options. Fit the need I was looking for to fill out my understanding the basic options strategies after getting brief intros to options via tastytrade. Moving on to a more advanced book now.

Essential Options Trading

Was not aware that a 2nd edition was available for this book, so might be a bit more coverage of higher tier plays in the new edition. Jul 25, C. A very basic, straightforward book on options. While I thought the book was decent, overall, I think it was lacking more depth. The examples used in the book were repetitive and very basic. This book could have been much more than what it was.

A book only for people with very little investment experience. Disappointed but a little more knowledgeable because of this book. Aug 21, Ioannis Neris rated it really liked it. Descent book for introduction. Doesn't mention a lot about option pricing and how to price volatility. Makes a descent start in understanding various strategies.