If you`re interested in investing in Tesla, one way to do so is through options contracts. Options contracts allow you to buy or sell a stock at a predetermined price within a certain time frame. However, before you start investing in Tesla options contracts, it`s important to understand the concept of contract size.
The contract size refers to the amount of the underlying asset, in this case Tesla stock, that is represented by the options contract. For example, if the contract size is 100 shares and Tesla is trading at $500 per share, the value of the options contract would be $50,000 ($500 x 100 shares).
When it comes to Tesla options contracts, the contract size is typically 100 shares. So if you buy one call option contract, you have the right to buy 100 shares of Tesla stock at the strike price (the price at which the option can be exercised) within the expiration date of the contract. Conversely, if you buy one put option contract, you have the right to sell 100 shares of Tesla stock at the strike price within the expiration date of the contract.
It`s important to note that options contracts can be bought and sold in multiples of the contract size. So if you wanted to buy 200 shares of Tesla using options contracts, you would buy two call or put contracts with a contract size of 100 shares each.
Understanding the concept of contract size is crucial when trading options contracts, as it impacts the potential profit or loss of the trade. For example, if you buy a call option contract with a strike price of $500 and the stock price rises to $550, you would make a profit of $5,000 ($50 gain per share x 100 shares) if you exercised the option. On the other hand, if the stock price falls to $450, your loss would be $5,000.
In conclusion, if you`re interested in trading Tesla options contracts, it`s important to understand the concept of contract size. Typically, Tesla options contracts have a contract size of 100 shares, and multiples of the contract size can be bought or sold. Keep this in mind when considering potential profits and losses in your options trades.
