Options can be either European or American options. A European option can only be exercised on the date specified by the option. An American option can be exercised on or before the date specified on the option. Options will also have an open interest, which is the amount of option contracts in existence at a point in time. For more on how to read option quotes, go to derivative quotes .
Options can either be in the money or out of the money.
The value of an option can be broken down into two components. The first component is parity value, while the second is time value. The parity value is simply the difference between the stock and strike price. From this, the time value can be calculated as the difference between the option price and the parity value. It should be noted that the further in time an option is to expire, the higher will be the time value of the option.