Option Order Form

When looking at an option order, it’s important to know the format used. Below is the format I will be using in all my option’s post. When reading my post it’s important you understand all letters and numbers of this order form.

Sell to Open 10 IBM 1/15/2016 $130 C @ $2 (+$2000)

 

Sell To Open – Indicates the order is to sell an option to open the position

10 – indicates the sell order involves 10 contracts (1000 shares).

IBM – indicates the order is to sell option for International Business Machines. IBM is the ticker symbol.

1/15/2016 – indicates the Expiration Date.

$130 – indicates the Strike Price.

C – indicates it is a Call Option. If there is a P, it would be a Put Option.

@ $2 – indicates the Premium. A $2 Premium on 10 contracts is $2000

(+$2000) – indicates the total premium received. 10 contracts (1000 shares X $2)

 

This order above is an order to sell an option to open the position, for 10 contracts of IBM to expire on 1/15/2016 with the Strike Price of $130. The option is a Call Option and the Premium is $2. This is the fundamentals of a basic option order. You must understand this form on sight.

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There are four basic types of orders

 

Buy to Open – Indicates buying an option to open the position

Buy to Close – Indicates buying an option to close the position

Sell to Open – Indicates selling an option to open the position

Sell to Close – indicates selling an option to close the position