Identifying an Option
While looking at an option contract, you need to look for the following four aspects:
- Whether it is a Call or a Put.
- What the underlying security is. Options can be written on almost anything: stock prices, stock indexes, FX rates, interest rates, commodities, etc.
- The expiration date (When does the option expire - tomorrow? Next month? Next year?)
- The fixed price (called the strike price or exercise price) you can buy or sell at.
The following is an example of how to identify an option.
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