I see the option chain have last, bid, ask, and strike price. How to make purchase call and put ption by
Purchase or Sell Call or Put stock options.
Answers
278 points
ThaDRAGN answered 7 months ago …
Last, bid and asking prices are exactly as they appear when you look up a stock quote. Last, being the price at which the last trade was executed.
Bid is the current price someone is willing to pay for the option and the Ask is the price the owner is willing to sell it for.
The strike price is that price at which the option is exercisable. For example, if it's a call option and the strike price is $35 then that means this option won't be profitable until the stock price exceeds $35 per share (plus the cost of the option).
2082 points
alanj answered 7 months ago …
Each call and put option has it's own ask and bid price. If you want to buy (open) and you don't want to wait use the ask price. If you want to sell (close) and you don't want to wait use the bid price. But you can put in a price anywhere between the ask and bid price.
UNDER NO CIRCUMSTANCES should you use the last price as a basis for determining your price to buy or sell. It could be days or even weeks old, Which would be way out of date.
ThaDRAGN's example he gave is if you hold until expiration. An option can become profitable even if the underlying stock moves in your direction but under the strike price if you still have a reasonable amount of time left on the option and the stock moves enough to cover you costs. That's because options have intrinsic and extrinsic values. An example of when this would happen would be soon or very close to the time when you made your purchase. (Or right after you bought the option the underlying stock started to move in your direction and overcame the volatility factor.)
