What is a series of options?

There are many call options on the stock market or are engaged in specific security, all of which have the same expiration date and the same price of exercise. As an example, ABC requires $ 15 for $ 15 per share that expires on June 15, 2010, includes an option series. In order to be considered as part of a number of options, the options must be identical in the type of option, sharing class, maturity and exercise price.

Call is the possibility to purchase a specific number of shares of specific security at a given price in the future in the future. PUT is the possibility to sell a specific number of shares of specific security at a given price in the future in the future. Calls and state, together called options, do not bind the owners to apply this option, but give it the opportunity to do it.

The investor can purchase a series of options to provide more flexibility in the performance of options. If the investor buys more options inSeries, can apply one option and keep others. This strategy would be useful if the price of basic security rises in the case of calls, but the investor suspects that he can continue to rise. It can apply one option in the series to take advantage of the price increase, but keep the remaining options. It can then apply the remaining options if the price of security is rising or let them expire if the security price remains flat or decreases.

On the contrary, the investor can buy the Puts option series because he expects the price of basic safety to decrease. As soon as the price begins to fall, it can apply Put to cover its cost of purchasing a series of options. Since it has already covered its costs, it will only benefit if the price of basic safety will continue to fall. It can perform its remaining options if it is still decreasing or may allow them to expire.

While a series of options consists of all options for specific security, which are in the classroom, sharing, dateM maturity and price, the investor does not have to buy all the options in the series. The investor only buys as many options as he chooses. It can then exercise these options as a group or individually, depending on its goals and the movement of the stock price.