In a previous chapter about options basics, we talked about the differences between stocks vs options.
In this chapter, we will dive deeper into the 5 Things You Need To Know About Options.
The first thing you need to know is the strike price.
You will learn…
- what a strike price is,
- the different intervals for strike prices,
- how to pick the right strike price,
- … and much more.
Let’s get started.
1.) The basics: What is the strike price?
Strike Price Definition:
The strike price of an option is the price at which the option buyer has the right to buy or sell an underlying security.
As an example, if you are buying a CALL option of AAPL with a strike price of 126, then you have the right to BUY 100 shares of AAPL for $126.
And if you are buying a PUT option of AAPL with a strike price of 125, then you have the right to SELL 100 shares of AAPL for $125.
Strike Price Intervals
When you open an options chain, you will see all the different strike prices that are…
