Puts and Calls

• Call options give a buyer of a contract the right--but not the obligation--to buy shares of the underlying stock. Put options give the buyer of the contract the right--but not the obligation--to sell the underling stock. The maximum risk is the purchase price of the contract.
  
  These contracts can be sold at any time during the life of the contract, provided it has value. The contracts have maximum value if the underlying stock is above (calls) or below (puts) the contract price.
  
  

Option Symbol Identification

• Just as a stock has a ticker symbol, options also have symbols. Each option has a "root" symbol that identifies the stock it's associated with, and it also includes extensions that identify the date of expiration, type (put or call) and strike price.
  
  

Transacting Options Contracts

• A "Level 2" (of 1 through 5) authorization is required to buy puts and calls. A separate application is submitted to the firm. Once the account is funded and approved, the account holder can make broker-assisted transactions, or use the online order entry interface to make the purchase.