Real-value options and out-of-the-money options are divided according to the exercise price and the underlying price.

For call options, if the underlying price is higher than the exercise price, the option is in-the-money, and vice versa; for put options, if the exercise price is higher than If the underlying price is the same, the option is in-the-money; otherwise, it is out-of-the-money. If the underlying price is equal to the exercise price, the option is at-the-money.

An option refers to a contract, originating from the American and European markets in the late eighteenth century, that entitles the holder to purchase at a fixed price on a specific date or at any time before that date. or the right to sell an asset. The key points of the definition of options are as follows:

1. An option is a right. Options contracts involve at least two parties: a buyer and a seller. The holder enjoys rights but does not assume corresponding obligations.

2. The subject matter of the option. The underlying of an option is the asset chosen to be purchased or sold. It includes stocks, government bonds, currencies, stock indexes, commodity futures, and more. Options are "derivatives" of these underlying assets, so they are called derivative financial instruments. It is important to note that the option writer does not necessarily own the underlying asset. Options can be "sold short". Options buyers may not actually want to purchase the underlying asset. Therefore, when the option expires, both parties do not necessarily make physical delivery of the underlying asset, but only need to make up the price based on the price difference.

3. Expiration date. The day on which the option expires as agreed upon by both parties is called the "expiration date". If the option can only be executed on the expiration date, it is called a European option; if the option can be executed on the expiration date and at any time before, then Called American options.

4. Execution of options. The act of buying or selling the underlying asset based on an options contract is called "execution." The fixed price agreed in the option contract at which the option holder purchases or sells the underlying asset is called the "exercise price".

Due to differences in options trading methods, directions, subject matter, etc., numerous options varieties have emerged. Reasonable classification of options will be more conducive to our understanding of option products.

Divided by rights

According to the rights of options, there are two types: call options and put options.

According to the type of options, there are two types: European options and American options.

According to exercise time, there are three types of options: European options, American options, and Bermuda options.

Options: Options trading refers to the right to be bought and sold in a certain period of time in the future. It is an option that the buyer has after paying a certain amount of premium to the seller in the future or on a specific date in the future. The price gives the seller the right to buy or sell a certain amount of the subject matter, but not the obligation to buy or sell. Options are divided into European options and American options according to the exercise method.

1. For European options, the buyer and holder can only choose to exercise the option on the expiration date.

2. For American options, the buyer can choose to exercise the option during the trading period after the transaction is completed and before the expiration date.