I am new and I have no clue what this option thing is about. Can someone explain how this works.. Like let's say I wanted a call option on 100 shared of a company how much would the commission be at optionshouse?
Options pricing ?!??
- Thread starter newbietrader100
- Start date
I am going to learn before I make any trades however I would like to know the pricing because it has been very unclear to me
Basic Puts and call pricing on stocks is pretty simple.
Very simplified example:
Say you think MGM is going up in the next few months
Trading now at 15.50
Look up the March MGM 16 strike calls
Say the price quoted is 1.25
Stocks are easy b/c the contract qty is always 100
so just multiply 1.25 x 100 = 125.00
So at expiration, you'd need MGM to close above 17.25 before you would have a profitable position (excluding commissions)
Commissions sometimes have a ticket price (flat rate) then X$ per contract traded. My broker has a $10 ticket charge and .99 per contract after that. (not the cheapest, not the worst either)
Check with the broker though as commissions vary dramatically
Hope this helps
JO
Edit: FYI - I actually looked up MGM Mar 16 calls and they're trading @ 0.71
Very simplified example:
Say you think MGM is going up in the next few months
Trading now at 15.50
Look up the March MGM 16 strike calls
Say the price quoted is 1.25
Stocks are easy b/c the contract qty is always 100
so just multiply 1.25 x 100 = 125.00
So at expiration, you'd need MGM to close above 17.25 before you would have a profitable position (excluding commissions)
Commissions sometimes have a ticket price (flat rate) then X$ per contract traded. My broker has a $10 ticket charge and .99 per contract after that. (not the cheapest, not the worst either)
Check with the broker though as commissions vary dramatically
Hope this helps
JO
Edit: FYI - I actually looked up MGM Mar 16 calls and they're trading @ 0.71