10. How long is the life of an option?

There is normally trading in options that have different lengths of time remaining until expiration - from less than a month to twelve or more months. The choice is yours. This flexibility makes it possible to select whichever option best coincides with when you expect a given price movement to occur.

Example: Buying an option that expires in October allows three more months for the expected price change to take place than buying an option that expires in July.

Purchasing a longer option increases the premium cost of the option somewhat (see question 12) but, as with most things in life, it's usually best to allow at least a little extra time for an expected event to occur!  Don't hesitate to seek your broker's assistance in deciding how long an option it would be advisable to consider purchasing.

877-4LEVERAGE (877-453-8372) · 305-257-3337
Fax: 305-258-1867
P.O. Box 4479 · Princeton, Florida · 33092
www.fidelityglobal.com
 

(*Please note: futures and options trading involves risk of loss and may not be suitable for everyone)

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