1.

An options contract is an agreement between a buyer and seller that gives the
purchaser of the option the right to buy or sell a particular asset at a later date at
an agreed upon price. Options contracts are often used in securities,
commodities, and real estate transactions.
2. Option prices quoted on an exchange such as the Chicago
Board Options Exchange (CBOE) are considered premiums as a rule because
the options themselves have no underlying value. The components of anoption
premium include its intrinsic value, its time value and the implied volatility of the
underlying asset.
3. American options allow option holders to exercise the option at any time prior
to and including its maturity date, thus increasing the value of the option to the
holder relative to European options, which can only be exercised at maturity.
The majority of exchange-traded options areAmerican.
4. A European option may be exercised only at the expiration date of theoption,
i.e. at a single pre-defined point in time. An American option on the other hand
may be exercised at any time before the expiration date.
5. call option
noun
STOCK MARKET
an option to buy assets at an agreed price on or before a particular date.
6. put option
noun
STOCK MARKET
an option to sell assets at an agreed price on or before a particular date.
7. he Strategy. A long call gives you the right to buy the underlying stock at strike
price A. Calls may be used as an alternative to buying stock outright. You can
profit if the stock rises, without taking on all of the downside risk that would result
from owning the stock.
8. Short Call - A type of strategy regarding a call option, which is a contract that
allows (but does not mandate) its holder to buy a security (specifically, a stock) at
a particular price during a certain future period. Should the holder think the price
of the security will fall between now and the day the contract expires, he/she may
sell short not only the underlying stock, but the corresponding call option itself:
Hence "short call."
9. Long put - An options strategy in which a put option is purchased as a
speculative play on a downturn in the price of the underlying equity or index. In a
long put trade, a put option is purchased on the open exchange with the hope
that the underling stock falls in price, thereby increasing the value of the options,
which are "held long" in the portfolio.

10. Short put - A type of strategy regarding the selling of a put option. The option
itself is a security in its own right, as it can be purchased and sold. Should the
holder of the option believe that the price of the underlying security will increase
before the contracts expiry date, he may buy the underlying stock. Or he may sell
the put option (hence short put), which requires him to buy the stock, should the
put buyer demand he do so.
11. In the money refers to an option contract that, if it were exercised today, would
be worth more than $0. A call option is said to be in the moneywhen its exercise
price is below the current price of the underlying asset.
12. "At the money" is one of three terms used to describe the relationship between
an option's strike price and the underlying security's price, or option
"moneyness." The other two are "in the money," meaning the option has some
intrinsic value, and "out of the money," meaning the option has no intrinsic value.
13. Out of the money - A call option with a strike price that is higher than the market
price of the underlying asset, or a put option with a strike price that is lower than
the market price of the underlying asset. An out of the money option has
no intrinsic value, but only possesses extrinsic or time value. As a result, the
value of an out of the money option erodes quickly with time as it gets closer to
expiry. If it still out of the money at expiry, the option will expire worthless.