The Really Options Trading Basics series of articles was conceived with the idea of creating a tutorial that is practical and allows anyone to start buying and selling Options in days!

(Even though is paper trading only, the paper trading interface is very similar to the actual trading platform!)
At the beginning of the series of […]

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To date, we have almost covered every component in an Options contract description. Taking the Options contract GOOG 530 Jul Call for example:

530 is the strike price and we have discussed “Which strike price to buy“
Jul is the Option expiry month and we have discussed “Which month Option to buy“
Call is a type of Options […]

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Now that you know about In-the-money, At-the-money and Out-of-the-money Options, how does this influence which strike price to buy?

The key lies in the how the Option price moves with the underlying stock price. Yes, when the stock price increases or decreases by a certain amount X, the corresponding Option price may not move by that […]

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I first introduced the term “strike price” in this post. Basically, strike price refers to the numeral in an Option contract description. For example, for the GOOG 530 July Call Option, 530 is called the strike price. For the GOOG 500 August Call Option, 500 is the strike price. But what is the significance of […]

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Time decay is another consideration. You see, time value of an Option contract does not decrease proportionately over time. The time value of an Options contract decreases in a manner like this:

So you see, the time value decreases at a faster rate when it is less than 30-60 days to Option expiration. Fastest when it […]

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