Before going any further, let’s get in touch with the nutshell definition of the option table terminology. In an option table, you will also see an open interest, which shows how many open option contracts are outstanding at the moment. There are two main types of option contracts that the trader can choose from: American and European.
All in all, options trading has come a long way in our day and age, and the option table is the living proof of this.
The charts below show the potential profit or loss (at expiration) for various options strategies. The majority of traders will close their option prior to the expiration date in order to limit losses or to receive profits earlier.
Furthermore, if Bob buys a call contract, he then has the option to buy 100 shares at the strike price. Now that you know how this terminology works, you are prepared to read the table and use it to develop your own option trading strategy. It is profitable to do so if the stock’s price is above the strike so that he could buy the shares for less than the stock is trading.
The difference is that American options can be exercised before the expiration date, unlike European options. From this point of view, American options are more advantageous, especially for the inexperienced trader.
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