Options

Make the most of your options trading experience.

The tools and resources you need to better manage risk and generate income.

  • Detailed Options Chains with quotes and customizable filters
  • Options Analytics with theoretical value, implied volatility and greeks
  • Predefined options screeners showing you the Canadian and US most actives by volume, price and percentage gainers, and price and percentage losers
  • Electronic order entry of covered and uncovered calls and puts
  • Consolidated quotes from the Options Price Reporting Authority (OPRA)
  • Commissions start from $4.99* + $1.25/contract

About options

An option is a contract enabling the purchase or sale of a specific security at a specific price during a specific time period. In the options market, the two words, "option" and "contract" mean the same thing and they are used interchangeably.

Options and risk

Options involve risk and are not suitable for all investors. Prior to buying or selling an option, you must be approved for option trading and have reviewed the Options Account Agreement, contained in the Scotia iTRADE Terms and Conditions.

When the number of shares and strike price can change

Although most of the time each contract represents 100 shares of the underlying stock at a specified strike price, there are times when the strike price, the number of shares deliverable or both can change depending on such events as stock splits and stock dividends.

When the number of shares and strike price can change

Although most of the time each contract represents 100 shares of the underlying stock at a specified strike price, there are times when the strike price, the number of shares deliverable or both can change depending on such events as stock splits and stock dividends.

Premiums

The "premium" is the dollar amount that a buyer pays to a writer for the right to purchase or sell a specified quantity of the underlying security, at a specified price, for a specific time period.

Holders and writers

The purchaser of an opening position in an options contract is called the "buyer" or "holder." The buyer is also said to be "long" the option or have a "long position" in the option. The buyer pays a premium in order to buy the option, which gives them a right that they can exercise during the life of the contract. 

 

The investor who sells the contract to open is called the "seller" or "writer." The writer is also said to be "short" the option or have a "short position" in the option and is obliged to perform if/when the holder exercises his right. The writer receives a premium for writing the option, as compensation for the obligation they have taken on.

Option type

The most familiar options are those issued on common stock. These are known as "equity options." Most of the discussion here focuses on equity options. Please note, however, that options are also available on other types of securities including major equity indexes such as the S&P 500.

Option contracts

There are two types of option contracts: a "Call" and a "Put."

Calls: If you buy a Call, you are buying a contract that gives you the right to buy 100 shares (usually) of a specific stock (the "underlying" security) from the option writer at a specific and fixed price (the "exercise" or "strike" price) at any time up to the expiration date (as determined by the expiration month of the option you buy). If you write a call, you are accepting the obligation to sell the stock to the call buyer at the strike price at any time up to the expiration date (as determined by the expiration month of the option you sell).

Puts: If you buy a Put, you are buying a contract that gives you the right to sell 100 shares (usually) of a specific stock to the put writer at any time up to the expiration date (as determined by the expiration month of the option you buy). If you write a put, you are accepting the obligation to buy stock from the put buyer at the strike price at any time at the buyer's discretion up to the expiration date (as determined by the expiration month of the option you sell).

Frequently asked questions

Pre-recorded webinars

Start investing with Scotia iTRADE today