Options pricing ?!??

Discussion in 'Options' started by newbietrader100, Feb 11, 2011.

  1. 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?
  2. jo0477


    Hey Newbie,

    I'd advise you do 2 things based on this question:

    1) Don't buy any options

    2) Start out at the CBOE website. They have some really good educational stuff to learn the basics.

  3. 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
  4. jo0477


    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


    Edit: FYI - I actually looked up MGM Mar 16 calls and they're trading @ 0.71