One option contract is 100 shares
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One standard stock option contract covers 100 shares of the underlying stock, so every quoted premium is multiplied by 100 to get the price of one contract.
Key points
- A premium is quoted per share, and one standard contract covers 100 shares. A quote of $1.50 is $150 per contract.
- Exercising one contract means buying or selling 100 shares at the strike price, which is the strike price times 100 in dollars.
- The contract size is what gives an option its leverage, for gains and for losses.
- After a stock split, a merger or a special dividend a contract can be adjusted and cover something other than 100 shares.
On this page
The quotes on an option chain are per share. The contract that is traded is for 100 shares. Every amount of money in options follows from this: the cost of a trade, the cash needed for an exercise, the size of a gain or a loss.
Why a quoted premium is multiplied by 100
The unit of trading of most options on stocks is 100 shares. The number that turns a quoted premium into the price of a contract is the contract multiplier, and for a stock option it is 100.
| Quoted premium | 1 contract | 5 contracts | 10 contracts |
|---|---|---|---|
| $0.25 | $25 | $125 | $250 |
| $1.50 | $150 | $750 | $1,500 |
| $4.00 | $400 | $2,000 | $4,000 |
| $12.30 | $1,230 | $6,150 | $12,300 |
An order is entered in contracts, not in shares. An order for 10 calls is an order on 1,000 shares.
What exercising one option contract costs
The strike price is per share as well. Exercising one 50 call means buying 100 shares at $50, a payment of $5,000. Being assigned on one written 50 put means buying 100 shares at $50, also a payment of $5,000.
| Strike price | Shares per contract | Dollars that change hands on exercise |
|---|---|---|
| $20 | 100 | $2,000 |
| $50 | 100 | $5,000 |
| $180 | 100 | $18,000 |
| $450 | 100 | $45,000 |
This amount is the size of the commitment behind a written put or an exercised call. The premium is a small part of it.
How the contract size gives an option its leverage
One contract moves with 100 shares and costs a fraction of their price. That is leverage: a small move of the stock is a large move of the option, measured against the money paid.
The same multiplier applies to a writer's loss. A written option that moves $3.00 against its writer costs $300 per contract.
Adjusted contracts that do not cover 100 shares
The terms of an option can be changed when something happens to the underlying shares, such as a stock split, a reverse split, a merger or a special distribution. The result is an adjusted option. Every adjustment is decided by the Options Clearing Corporation, case by case. The options disclosure document gives these examples.
| Event | The option before | The option after |
|---|---|---|
| 2-for-1 stock split | One option on 100 shares, strike price $60 | Two options, each on 100 shares, strike price $30 |
| 3-for-2 stock distribution | One option on 100 shares, strike price $50 | One option on 150 shares, strike price $33.33 |
| 1-for-10 reverse split | One option on 100 shares, strike price $50 | One option that delivers 10 shares. On exercise $5,000 is still paid, $50 × 100 |
| Merger for cash, $50 per share | One option on 100 shares | One option that delivers $50 in cash per share |
| Ordinary cash dividend | One option on 100 shares | No adjustment |
After a reverse split the strike price and the multiplier of 100 stay as they were, and only what is delivered changes. The quoted premium of an adjusted option can for this reason look out of line with the other options on the chain.
What can go wrong with the contract size
The common error is to read a quote as the price of a trade. A premium of $2.40 is a payment of $240 per contract, and ten contracts are $2,400.
The second error is to write a put, or to let a call be exercised, without the money for 100 shares. An exercise at a strike price of $180 moves $18,000 per contract.
The third is to trade an adjusted option as if it were a standard one. What an adjusted contract delivers decides what the option is worth. An adjustment that replaces shares by cash takes away the time value of the option.
Questions and answers
How many shares is one option contract?
One standard stock option contract covers 100 shares of the underlying stock. An adjusted contract, created after an event such as a stock split or a merger, can cover a different number of shares, or shares and cash.
Can an option be bought for fewer than 100 shares?
No. The smallest order is one contract, and a standard contract covers 100 shares. An investor who wants exposure to fewer shares cannot get it with a standard listed option.
Terms used on this page
- Contract multiplier
- The number by which a quoted premium is multiplied to get the price of one contract. It is 100 for a standard stock option, which covers 100 shares.
- Premium
- The price of an option, quoted per share. One standard contract covers 100 shares, so a premium of $1.50 is $150 per contract.
- Adjusted option
- An option whose terms were changed after an event such as a stock split, a merger or a special dividend. It may cover a number of shares other than 100, or cash and other securities.
- Leverage
- Controlling a position worth more than the money paid for it. A premium is a fraction of the price of 100 shares, so a small move of the stock is a large move of the option, in both directions.
- Strike price
- The price per share at which the holder of an option may buy (a call) or sell (a put) the underlying shares. It is fixed for the life of the option.
Sources
- Characteristics and Risks of Standardized Options, The Options Clearing Corporation (read 29 September 2026). The options disclosure document, edition of June 2024.
- Splits, Mergers, Spinoffs & Bankruptcies, The Options Industry Council (read 29 September 2026). Frequently asked questions.
- Options Overview for Investors, The Options Industry Council (read 29 September 2026).
- Leverage & Risk, The Options Industry Council (read 29 September 2026).
- Equity Options Product Specifications, Cboe Global Markets (read 29 September 2026).