Equity options are agreements between two parties for a specified time period (up to the expiry date) that give holders the right, not the obligation, to buy or sell a specified number of shares, usually a lot of 100, at a pre-determined price (exercise or strike price). Investors can buy or sell options just like shares.
A call option contract gives the holder the right to buy and obliges the writer to sell a specified number of shares at a specified strike price, any time before its expiry date.
A put option contract gives the holder the right to sell and obliges the writer to buy a specified number of shares at a specified strike price, any time before its expiry date.
The strike price is the price at which the option holder can buy (call option) or sell (put option) the underlying stock.
The option premium is the price the buyer pays the seller for the rights conveyed by the option contract. It is the price of the option.
The expiry date is the date on which the option and the right to exercise it cease to exist. Options expire at noon on the Saturday following the third Friday of the expiry month (last trading day).
Source: TMX Montreal Exchange
Options FAQ – TMX Montreal Exchange
Options Guides and Strategies – TMX Montreal Exchange
Milne Advisory Group