Part 8 Trading Master Class

Key Terms in Option Trading

To understand option trading well, you must know these important terms:

Strike Price: The fixed price at which the underlying asset can be bought or sold.

Premium: The price paid to purchase an option.

Expiry Date: The date when the option contract ends.

In the Money (ITM): When exercising the option is profitable.

Out of the Money (OTM): When exercising the option is not profitable.

At the Money (ATM): When the asset’s price is equal to the strike price.