Four main aspects of options contracts
Every options contract has:
- An expiration date. You can only exercise, or sell, your options contract by the expiration date. Then you lose the right to buy or sell the underlying stock.
- A strike price. This is the price you pay for the underlying stock — regardless of the market price — should you exercise the option.
- A premium. The amount you pay to buy the options contract, excluding brokerage fees. The premium varies depending on factors like the asset’s price and the expiration date.
- A contract. One options contract typically represents 100 shares. So if you buy one call option, you get the right to buy 100 shares at the strike price until the expiration date.