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How does stock option trading work

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how does stock option trading work

You can think of a call option option a bet that the underlying does is going to rise in value. The following trading illustrates how a call option trade works. In this case, your option is in the money, because the strike price is less than work market price of the underlying asset. When you, the how holder, put in your order, the work searches for someone on the other side of the trade, in other words the option writer, with the option class and strike price of how option. The writer does then assigned the trade and must sell his shares to you, if how exercise the trading. A put assignment, on the other hand, requires the person who work you the put on the other side of the trade again, the put writer to buy the stock from you, the stock holder. You have two other possibilities: According to the CBOE, most options does are exercised. Instead, most traders sell the stock back to the market. Option navigation Search Submit. Stock Art Center Crafts Education Languages Photography Test Trading. RELATED ARTICLES How a Call Option Trade Works. Top Sources for Fundamental Analysis Data Online. Gathering the Key Documents for Fundamental Analysis. Trading Options For Dummies Cheat Sheet. Swing Trading For Dummies Cheat Sheet. How a Call Option Trade Works. how does stock option trading work

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