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What is an option or option contract?
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on.
What is a Call Option?
Formal contract between an option seller (the optioner) and an option buyer (the optionee) which gives the option buyer the right but not the obligation to buy a specified contract, financial instrument, property, or security, at a specified price (called exercise price ) on or before the option’s expiration date. Investors who buy call options believe the price of the underlying asset will go up, and they will be able to make a high profit from a small (marginal) investment.
What is an out-of-the-money option?
Option with a negative intrinsic value. A call-option is out-of-the-money when its exercise price is above the current market price of the underlying contract. A put option is out-of-the-money when its exercise price is below the current market price of the underlying contract.
What is an in-the-money option?
Option contract with an intrinsic value. A call option is in the money when its exercise price is below the current price of the underlying asset. A put-option is in the money when its exercise price is above the underlying asset’s market price. |
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