An option is simply the right, for a specified period of time, to buy or sell an item at a guaranteed price. Stock options then, are rights to buy or sell shares of stock at a guaranteed price during the life of the option.

There are two types of stock options – “puts” which give the holder the right to sell the stock at guaranteed price; and, “calls” which give the holder the right to buy the stock at a guaranteed price. Of course, you have to pay to purchase a stock option.

In addition to the buyer of an option, there is a seller of an option as well. The seller of a call receives a premium for agreeing to sell the stock if the buyer decides to exercise the call option. The seller of a put option agress to buy the stock if the buyer of the put option decides to exercise his put option. The seller receives the premium from the buyer for agreeing to be the seller.

Through our clearing firm, AXOS Clearing, Southeast Investments has access to a very large inventory of options.