A stock under which you can buy and sell options.
It means that some bank somewhere (or maybe all of 'em) is making a market in options, likely both put and call, on that stock.
So..."everyone" makes a market in options on Disney. Big, fat, liquid, well-known company that "everyone" owns. So something like 25 banks around the world trade options liquidly in DIS. Good for the customer; less good for the banks.
Why? Well, the more competition trading in a commodity, like a stock option on DIS, the narrower the spreads (or profits) to the banks.
So that's an optionable stock.
What's a non-optionable one then? Well, many stocks are just not liquid enough to be worth a bank setting up the infrastructure to deal in them. Lawyers. Technical systems. Committed capital and shares to back up the trades. The hiring of $10-million-a-year traders to run the desk. Lots of costs. Unclear rewards if a stock only trades, say, a few million shares a day. So they don't.
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Finance: What is Intrinsic Value (of An ...6 Views
Finance allah shmoop what is the intrinsic value of an
option All right this is brandi She owns a twelve
dollars strike price call option toe buy a share of
my fifteen minutes are up dot com a retirement home
chain for reality tv stars who recently gained self awareness
Well the stock is trading for fifteen bucks a share
of this moment Her strike price is twelve so the
intrinsic value of that option is fifteen minutes twelve or
three bucks that is it is three dollars in the
money and if brandy converted it into a share this
moment and then immediately sold the stock for fifteen dollars
in cash well she'd make three bucks But there's a
catch per call option doesn't expire for five weeks so
that three dollars in the money is actually worth more
than three dollars because she has data or time yet
to exercise and convert or just sell the option itself
So it's worth mohr because well a stock might go
up from fifteen dollars in overtime Stocks go up so
in the next five weeks well couldn't go up a
dime twenty cents twenty five cents and make that three
Dollars worth three ten three twenty three Twenty five Sure
sure it could happen So yeah that's The difference between
actual value and intrinsic value You get seita kickers in
there making the option's worth more than just converting them
into stock and selling them right there And yeah it
looks like our one and a half minutes are up
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