Basic Options Intro

Front 1

What is the Delta Option Greeks?

Back 1

Delta is an option greek representing the rate of change of the option value with respect to the stock's price movement.



In theory, if delta is .90 on a long call option and the stock moves up one dollar, the option increases by ninety cents (delta).



Delta should be understood as an estimate on the option price change because it is only one variable in the option price forecast.

Front 2

What does an "option" give the buyer the right to do?

Back 2

Gives the buyer the right, but not the obligation, to buy or sell an asset at a set price on or before a given date.

Front 3

Who issues options?

Back 3

Investors, not companies, issue options.

Front 4

What do buyers of call options bet on a stock to do?

Back 4

will be worth more than the price set by the option (the strike price), plus the price they pay for the option itself.

Front 5

What do buyers of put options bet that stock's price will do?

Back 5

will drop below the price set by the option.

Front 6

An option is part of a class of securities called derivatives, what does this mean?

Back 6

means these securities derive their value from the worth of an underlying investment.

Front 7

When do options expire?
(from mike coval's stock class)

Back 7

11:59am on the Saturday following the 3rd Friday of the month.