Results for: Options

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What is an option school?

an option school aperson that isn't pasing a sertain grade has got to go to an option school.in an option school they help you to pass the grade that you are no a… (MORE)

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In Stock Options and Futures

What is the call option and put option?

Call options are contracts that allows you to buy a stock at a fixed price no matter what price it is in the future. You usually buy call options if you think a stock is going… (MORE)

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Jasonnoguchi

221 Contributions

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In Business & Finance

Futures and options?

Futures are contracts that allows you to buy certain commodities at a certain price by a certain date. Unless closed out, futures contracts are binding and the buyer of the co… (MORE)

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Kidchico

1 Contribution

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In IQ

What is options house?

OptionsHouse is a broker dealer based in Chicago that offers a Web-based, near-professional trading platform -- specializing in trading options. Highly ranked, the platform fe… (MORE)

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Megan

185 Contributions

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In Stock Market

What is an option?

Options An option is the right to buy or sell the underlying commodity (e.g., stock) during a specific future time at a predetermined price. The …price or cost of an option is called a "premium". The factors which determine an option's value are: 1. Price of the underlying 2. Time to Expiry 3. Strike of the option 4. Volatility of the underlying Example: Stock Options on General Electric General Electric stock is currently trading at $34.00. You purchase a Call option ("right to buy") X shares of GE stock at $30.00 on 17 Nov 2006. Underlying = X shares of General Electric Stock Strike = $30.00 Expiry = 18 November 2006 Option Cost: $4.70 (1) At expiry: GE Stock is $40.00. You "exercise" your option: Buy the stock at $30.00, then sell the stock at $40.00, to make $10.00 on the exercise. Your profits are: $10.00 - $4.70 (cost of option) = $5.30 per share (2) At expiry: GE Stock is $28.00. You could buy the stock at $30, but then you'd lose $2.00 per share! Your options expire worthless, and you have lost the money you paid for the options. Volatility, Time Value If the price of GE is only $34.00 today, why would you pay $4.70 for the right to buy it at $30.00? ($34.00 strike - $30.00 current price = only $4.00!) The answer is that we don't expect a stock price to remain constant over time. This is where uncertainty comes into play. Uncertainty has value. A stock price is volatile. Think about it: would you expect GE share price in a month to be exactly the same price it is today? No. So there is a good chance that the price will be above $34.00 (or below $34.00). Along these same lines, the more time there is between now and expiry, the more uncertainty there is. Therefore, time and volatility play a big role in how an option is valued. Going back to GE, we can easily see the time value reflected in the price of an option with the same strike but different expiry. The extra month of time is worth $0.30 upfront cost. Underlying = X shares of General Electric Stock Strike = $30.00 Expiry = ** 18 November 2006 ** Option Cost: $4.70 Underlying = X shares of General Electric Stock Strike = $30.00 Expiry = ** 18 December 2006 ** Option Cost: $5.00 An option grants the holder the right but not the obligation to buy or sell the underlying stock at a fixed price by a fixed date. As options only cost a fraction of the price of the underlying stock, it is commonly used as a speculative leverage instrument. that you think what you think (MORE)

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Earnest Strews

15 Symptoms Of Vitamin D Deficiency That Most People Ignore

If you are experiencing any of these symptoms, it may be time for you to get outside and catch some rays. … (MORE)

MaryLou Ross

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Earnest Strews

17 Obvious Things You've Probably Never Thought Of

When it comes to basic facts, what you don't know can hurt you, or at the very least surprise you.… (MORE)

Ray Kaminski

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Earnest Strews

Simple Tricks Even an Old Dog (or Young Pup) Can Learn

As the saying goes, you can't teach an old dog new tricks. Some tricks, however, are so simple that even an old dog or new puppy can learn them. Just practice any of the follo… (MORE)

Earnest Strews

Anywhere But The Roof: Best Methods for Traveling With a Dog

While traveling with a dog down the open road makes for good memories, doing it properly takes some thought. Help you and your dog enjoy the time you spend journeying together… (MORE)

Jkjain1979

1 Contribution

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In Stock Options and Futures

What is a call option?

In commercial contracts, there are situations of defaults/deadlock between the parties. In such a situation parties are given options, like put and call options as exit strate… (MORE)

1 person found this useful

Joe Wenham

12,656 Contributions

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In Definitions

What does optional mean?

Something that can be chosen but is not required. For instance, you can have a hamburger, but do not need to have pickles on it, they would be optional.

39 people found this useful

Travis Helps (HelpsGood)

7,260 Contributions

My imagination is a monastery and I am its monk

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In Stock Options and Futures

What is an option contract?

An option contract is basically a contract that give the holder the rights, but not the obligation, to buy or sell an underlying asset (Example stocks) at a predetermined … (MORE)

cat kluss

97,094 Contributions

Updated Answer

In Business Accounting and Bookkeeping

What is a property option?

A financial derivative that represents a contract sold by one party to another party The contract offers the buyer the right, but not the obligation, to buy or sell a security… (MORE)

Jasonnoguchi

221 Contributions

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In Stock Options and Futures

How do you value an option?

Options are valued using a theoretical model known as the "Black Scholes Model". The black scholes model prices options based on what are known as "Greeks", which are mathemat… (MORE)

Results for: Options

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