Option is the security that is bought and sold in the stock market. But know a days most exchanges are specialized in only trading the Options. Option can be viewed as the instrument that provides its holder with an opportunity to purchase or sell a specified number of common stock at a stated price on or before the expiry date. The development of specialized options exchanges has created markets in which to trade these options.
The basic forms of option include rights, warrants, calls and puts. But the most common types of options are Calls and Puts.
A Call option is the option to purchase specified number of shares of a stock on or before the specified date and also on specified price. Call option typically has the life 1-9 months sometimes 1-year. The price over which the holder of the call option can buy the stock at any time before maturity period is called Striking price. It usually set near to the market value.
A Put option is the option to sell a specified number of shares of a stock on or before the pre-specified date at the pre-stated striking price. Like call option the striking price of put option is set close to the market.
Despite of all this, the trading of options over exchanges is more profitable than of any other security. And it is also amazing that it does not require any specialized knowledge before going to trade options. There are only few simple steps that must be kept in mind before trading. If you are concerned, please visit the below Link and Download an E-Book for assistance.
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