Part 1 Trading Master Class With Experts

Basic Terminology in Option Trading

Before diving deep, let’s get familiar with key terms used in options:

Call Option – Gives the buyer the right (not obligation) to buy the underlying asset at a certain price before expiry.

Put Option – Gives the buyer the right (not obligation) to sell the underlying asset at a certain price before expiry.

Strike Price – The fixed price at which the option holder can buy (for calls) or sell (for puts) the underlying asset.

Premium – The price paid to buy the option contract. This is the cost of obtaining the right.

Expiry Date – The date when the option contract expires. After this, the contract becomes invalid.