Stock options are contracts to buy or sell an underlying traded stock. "Calls" are contracts to buy the stock. "Puts" are contracts to sell the stock. Options contracts are bought/sold in units of 100 shares (4 contracts would be for 400 shares of the underlying stock). Options are good for a certain period of time (until the "expiration date"). With U.S.-style options, the holder (buyer) of the option may "exercise" the option contract at any time to buy (if it's a "call") or sell (if it's a "put") the underlying stock at the "strike price" of the option. In practice, most options contracts are sold back on the market before their expiration.

By plotting all of the traded CALL (buy) options for the S&P 500 ETF (symbol: SPY) together, we can spot mis-priced options contracts (crossing lines) and periods of high underlying instrument volatility (merging of lines):

SPY CALLs 01/2009 DIA CALLs 01/2009 QQQQ CALLs 01/2009 C CALLs 01/2009 CX CALLs 01/2009 IBM CALLs 01/2009

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