Financial Markets Book Financial Markets For The Rest Of Us
An Easy Guide To Money, Bonds, Futures, Stocks, Options, And Mutual Funds
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by Robert Hashemian

Page 276

Underlying Stock - In our example GE would be the underlying stock for GEAO.
Option Type - In our example GEAO is a call option.
Strike Price - In our example the strike price for GEAO would be $75.
Days To Go - Number of days remaining until expiration (this normally includes non-trading days such as weekends).
Current Price - This is the most recent price paid for the option. It is expressed per each underlying share. In order to get the price for each contract, you must multiply this price by 100 (since each contract represents 100 shares of the underlying stock). Option prices are normally expressed in fractions whenever needed, with 1/16 often being the lowest fraction possible. So you may see prices such as $20, $9 1/2, $5 3/4, $1 5/8, $4 3/16, $1/16, etc. With the newer decimal rules, option prices are expressed in $0.05 and $0.10 increments. For example, $5.75, $1.65, $4.10, $0.05, etc.
Ask And Bid Prices - Just like stocks, a seller's asking price is the ask price while the buyer's offering price is the bid price. When a buyer decides to take the ask price or a seller decides to take the bid price, the trade is concluded and the trading price becomes the option's price until the next trade happens. Again these prices are expressed per share of the underlying stock price, not per contract.
Volume - This is the number of contracts traded so far during the day.
Open Interest - This is the total number of outstanding contracts on the option so far. As new contracts are created and sold, open interest goes up. As contract positions are settled, open interest goes down by the number of settled contracts. In other words open interest reflects the total number of contracts of a particular option that people are currently holding.
Premium - The premium is the price you pay for the option (i.e., price for the right to exercise at a fixed price). Sometimes the premium
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Table of Contents
Copyright and Disclaimer
Book Chapters
Table of Contents Copyright and Disclaimer Foreword Money
Bonds Futures Stocks Options
Mutual Funds Retirement Final Words Appendix A

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