Personal Finance & Money Asked by BatyaGG on June 7, 2021
I am wondering what is shares lot size of options for any stocks in finance yahoo list. For example in this particular AMZN call option ask price is 251.85, expires in March 2021, and the strike is ATM. Does that mean that buying 1 option for 251.85 gives me a right to buy 100 shares of AMZN until March with current stock pricing?
I am wondering that 100 shares of AMZN will cost 318 100$ and 251.85 is just 0.08% of that total cost of 100 shares. So this number is just looks unrealistic for me, since for only 0.08% fee you basically "freezing" price for 4 months. Could someone explain me, what is the shares lot size indicated there, may be it is price for 1 share option?
The prices in the options market are shown per share. For example $251.85 is per share of underlying.
Each option contract is typically for 100 shares. This is called the multiplier. Anything other than 100 is called a Special Delivery Option which typically come up when certain corporate actions occur (e.g. splits, spin-offs, acquisitions, special dividends etc.).
Purchasing 1 option contract at $251.85 when the contract has the typical multiplier of 100 would cost $25,185.00.
What is the typical multiplier for a US Exchange-listed option?
100 shares.
See Understanding Stock Options for more background.
Correct answer by xirt on June 7, 2021
The "lot size" for equity options is 100 shares. (Technically it's one contract, but the terms of the contract will specify that it's for 100 shares)
Does that mean that buying 1 option for 251.85 gives me a right to buy 100 shares of AMZN until March with current stock pricing?
No - it mean that you have the right to buy 100 shares of AMZN for $3,170 per share. That one option costs $251.85 per share. So one contract will cost you $25,185.
It also means that the price of AMZN would have to rise to a break-even price of $3,421.85 per share (plus commissions) for the option to be profitable overall. If AMZN is below the strike ($3,170) at expiry you're just out your premium. If it's between the strike and the break even price, you'll get some of your premium back.
Answered by D Stanley on June 7, 2021
One option costs $251.85, giving you the right to buy 100 shares until March expiration for $3,170 per share for a total cost of $3,421.85 per share.
Today's closing price was $3,185.07 so you would be agreeing to buy the stock for 7.4% more than today's close.
Answered by Bob Baerker on June 7, 2021
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