in the stock market, what does option chains mean?

Question

for example Sony Corp., the stock symbol is SNE. but then it shows you option chains and the symbols are the same but with two extra charecters like SNEXC, SNEKE, SNELI etc... What are these? and what does it mean?

chuck p, i didn't understand you... can you explain it in terms so that someone who has very little experience in the stock market can learn?

Answer 1

Options are the right (but not the obligation) to buy 100 shares of stock at a fixed price for a certain period of time. I'll make up an example. You could pay $100 to buy 1 (call) option to company XYZ at $20 a share that expires in March. (always on the third friday of the month). That means that you are now able to 100 shares of company XYZ from now until March, for $20 a share, or $2000 total, regardless of the current stock price. If XYZ has a real good day tomorrow, and goes to $25, you would still only pay $20.

A put option is similar, but it is the right to SELL a stock at a fixed price.

There is more to it, but thats the basics.

Answer 2

This is simply a list of all stock options related to a particular stock. In your case, Sony, SNE, has a number of call and put options, hence the 5 letter designation. Options are used by traders or you and I when we sense there will be a significant change in the stock's performance up or down. Instead of buying or selling the stock, we can "opt" to buy a contract to purchase or sell these shares at a specified price.
If we think the price movement will be upward, we would buy a "call" contract. For example, say Intel is trading at $25 and we believe it will go up to $32 within 6 months. Well, we can spend $2500+ comm for 100 shares or buy 1 6 month contract @ $3 per share with a strike price of $27.50. The contract costs $300 + comm. Keeping it simple, say Intel hits $30 in month 2, your shares have increased $500 or 20%, you would have lost 1/3 the option value due to loss of time, but made it up from the increase in underlying stock value, hence you would have 200 remaining time value+ 250 in the money(amount over the strike price)=$450 or 150% return.
If you are looking at a potential downside price movement, then you would buy a put option. This gives you the right to sell the shares at a given strike price, hence, the lower the stock price falls, the more money you make.
Options are not meant for everyone, and experienced traders typically use them to cover their equity positions as a form of insurance.

Answer 3

First, I am assuming you do not know what an option is. You can learn what they are by going to

http://www.cboe.com/LearnCenter/cboeeducation/Course_01_01/mod_01_01.aspx

and reading through the first several pages of the tutorial.

If there are options for a stock, there are many different options for that stock. there are two types of options (calls and puts), at least four different expiration months, and at least three different strike prices for each. So for each stock there are usually at least

2 types x 4 months x 3 strikes = 24 different options.

Some stocks have hundreds of different options. An option chain is a list of those different options and usually some trading information about them, such as the current bid and the current ask quotes.

The first of the two additional characters in an options symbol is the expiration month code. They are listed at

http://www.cboe.com/TradTool/strikepricecode2.aspx

The second of the additional characters is the strike price for the option. These are not always used consistently, but the most comon usage is shown in the table at

http://www.cboe.com/TradTool/strikepricecode3.aspx

Answer 4

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Answer 5

Penny stocks are loosely categorized companies with share prices of below $5 and with market caps of under $200 million. They are sometimes referred to as "the slot machines of the equity market" because of the money involved. There may be a good place for penny stocks in the portfolio of an experienced, advanced investor, however, if you follow this guide you will learn the most efficient strategies https://tr.im/4ed13

Answer 6

The option chain shows the going prices of the options for the different months and strike prices. They have different prices depending on how close to the money they are, that is why they have different ticker symbols.