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Options are contracts that give you the non-binding right to purchase or sell a specific stock. All options have a strike price and an expiration month.   Options are not available for all companies and every month.

There are two types of options: calls and puts.

  •  Buying a call gives you the right to buy a certain stock at a certain price.

  •  Buying a put gives you the right to sell a certain stock at a certain price.

Put and Call options expire in the expiration month after a set amount of time.  Options expire on the third Friday of each month, and options can be purchased for various time frames, as available for the stock. For example, let’s say stock XYZ is at $48 on January 1. There could be call and puts options available with expiration months in January, February, March, June, and September with strike prices of $40, $45, $50, $55, and $60, respectively. The strike prices available will be based loosely on the range of the stock over the previous year. So, if you bought a January 50 call, you would be paying a certain amount of money for the right to buy the stock at 50 until the third Friday in January. If you bought a June 40 put, you would be buying the right to sell the stock at 40 until the third Friday in June. Each contract represents 100 shares of stock. In general, options at the same strike price get more expensive with later expiration dates because the right to buy or sell the stock over a longer period of time is worth more premium.

Options are high-risk transactions that require a certain amount of experience and understanding.

If you're looking for info about employee stock options plans (ESOPs), please refer to the SEC web site.