These are contracts that gives the owner the right to buy or sell an asset at a fixed price, called the strike price, for a specific period of time. The “asset” may be several kinds of underlying securities. Some of the most common ones are stocks, indexes, or ETFs. That period of time could be as short as a day or as long as a couple of years, depending on the option. The seller of the option contract receives the payment from the buyer and then takes on an obligation to take the opposite side of the trade if the owner chooses to buy or sell the asset. Keep in mind, we don’t charge a fee for closing options positions that are 5¢ or below.
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