An options order contains more information than a stock order. Follow this example to learn what's similar to and what's different from a stock trade order.
Buy or sell to open 1 January 22, 2024, XYZ 70 call at 3.25
| Buy or sell | Like a stock trade, this is the action. |
| To open | Not like a stock trade, Buy or Sell “to open” indicates you are creating a new position in your account. Buy or Sell “to close” indicates that you are closing an existing position. |
| 1 | Similar to a stock trade, but different. This indicates the number of contracts being traded (not the number of shares). |
| January 22, 2024 | Not like a stock trade, this is the expiration date; the date at which the option and its rights and obligations will no longer exist. |
| XYZ | Similar to a stock trade, but different. This is the "underlying," which is usually 100 shares of XYZ stock. |
| Multiplier | The multiplier is the value used to calculate the cost (premium paid) or proceeds (premium received). Typically, 100 is the multiplier. |
| 70 | Not like a stock trade, this is the strike price; the price at which the stock is traded if an option is exercised or assigned. |
| Call | Not like a stock trade, this is a type of option. Call options give option buyers the right to buy the stock and sellers the obligation to sell the stock. There are also put options. |
| At 3.25 | Like a stock, this is the price per share of the option. Since each contract typically represents 100 shares, the total dollar cost is $325 plus fees. |