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A stock CALL option is the right to buy. A stock PUT option is the right to sell.
See related links for a nice resource and articles how options work.
In the Derivatives markets, a stock option or "option" is a contract to buy or sell the underlying stock at a Strike price. This agreement allows you to pay a premium for this arrangement. See more answers to such questions at http://growthmag.com .
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What does this 'stock option plan' mean?
A stock option gives you the right to buy stock at a specific price. In the US, they're a fairly common way to partially pay companies' executives. Acme might give its CEO an option on 1000 shares of stock at the price of $50 per share as part of her paycheck. What she'll do is to wait until the stock hits, say, $65 per share then exercise her option and make $15,000 in paper wealth in one whack.Let's say your company's shares cost 50 pounds per share the day you buy your option, and they are going to sell you an option to buy enough stock to be worth 5000 pounds (or 1000 shares). You get a year to exercise the option after you get it. If you wait until the stock goes to 80 pounds per share, you'll get 8000 pounds worth of stock for 5000 pounds. If you are allowed to resell the stock right after you get it, you'll make 3000 pounds instantly. If you must hold it for a while--some companies make you, to keep you from being suspected of insider trading--wait till it goes up even more and then sell it.
What is the difference between the terms 'accumulate' and 'buy' in terms of buying stocks?
Buy is that time is right to buy the stock NOW. Accumulate is that if you hold the stock keep it but be vigilant about the right time to get more; eg. time is not right to buy immediately but it is a good stock and keep and eye for an opportunity to buy (e.g suddent price drop)
What is call and put in stock market?
There are call and put options and call and put futures contracts. They work the same, except that with an option contract you can allow the contract to expire worthless, while a futures contract has to either be closed out or settled. Let's use options terms. A call option gives the purchaser the right, but not the obligation, to buy stock at a certain price on or before a certain date. A put option gives the purchaser the right, but not the obligation, to sell stock at a certain price on or before a certain date. You buy a call if you think the price of the stock is going up. Calls become worth exercising (or "in the money") when the stock is more expensive than the "strike price" on the contract. So...if you have a call whose strike price is $20, and the stock goes to $23, you exercise the contract, buy for $20 per share and sell at $23. You had to pay a "premium" to buy the option, so subtract the premium from the difference between what you bought it for and what you sold it for to determine your profit. You buy a put if you think the price of the stock is going down, and a lot of these are bought to stop losses. You have a stock you paid $20 for. It's gone up to $40 and you'd like to keep some of the profits. You therefore buy a put at $38. If the stock drops below $38, you exercise the option, sell the stock, subtract the premium and keep the profits.
What is an option?
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 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. 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: $5.00An 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
Will somebody buy your stock when you sell them?
yes if the price is right
What is the definition of a free stock option?
In short, a free stock option is just a stock option that is free. It gives you the right to buy something, regardless of whether you actually buy it or not.
What is Exercise of Stock Options?
Stock options is when you have a right to buy (or sell, but most commonly buy) a stock at a predetermined price.Exercising a stock option means that you use it: You buy the stocks at the agreed price, and the options expire as you spent them on the stock purchase.
What is excersing a option?
Exercising an option means exercising your rights to buy or sell the underlying asset in accordance to the parameters of the option. When you exercise a call option, you will get to buy the underlying stock at the strike price no matter what price the stock is trading at in the market. When you exercise a put option, you will get to sell the underlying stock at the strike price no matter what price the stock is selling at in the market. In both cases, the option you own disappears from your account.
What is stock future?
A futures contract is an obligation to buy a stock at a certain price on a certain date, unlike and option, where there is no obligation to buy, only the right to buy. Check out this website, it might help you get started.
Is buying stock on margin the same as options?
No. An option is the legal right to buy stock at some time in the future at a pre-arranged price. You can buy a stock option, but it doesn't entitle you to the actual stock until you exercise the option. Buying on margin means that you're currently purchasing the actual shares, but you're borrowing part of the money you're using to do so from your broker.
Differentiate between call option and put option information?
Call options give you the right to buy a stock at a specific fixed price no matter how high the stock rises to in future. Traders normally buy call options when they expect the stock to rise. Put options give you the right to SELL a stock at a specific fixed price no matter how low the stock drops to in future. As such, traders normally buy put options when they expect the stock to fall. Read the links below for more details.
What does the accorynm ESOP stand for?
This a an employee stock buy option, also known as Employee ownership through employer stock. This is best define as the Employee share Option Plans (ESOP). You are basically given the option to buy stock into the company.
What is the meaning of Employees stock option plan?
An Employee stock option is a call option on a company's own stock issued as a form of non-cash compensation. A stock option granted to specified employees of a company. ESOPs carry the right, but not the obligation, to buy a certain amount of shares in the company at a predetermined price. When the employees exercise their stock options, shares would be issued and thus, outstanding shares would increase.
What is the difference between a call option and a put option?
A call option gives the option buyer the right, but not the obligation, to buy a certain amount of stock on or before a certain date for a certain price. A put option gives its buyer the right, but not the obligation, to sell stock on or before a certain date for a certain price. How the options are exercised is another difference. If you bought a put, you're hoping the stock price falls below the strike price--the certain price in the contract. It would make no sense to sell stock for $10 a share if it's $15 now, right? Calls exercise when their stock price goes above the strike price.
What is a futures stocks?
A futures contract is an obligation to buy a stock at a certain price on a certain date, unlike and option, where there is no obligation to buy, only the right to buy. Check out this website, it might help you get started.
Where can I learn about stock option research?
Stock Option Research (SOR) is when you analyze the stock market before you make a bid or buy a stock. This can be useful for getting money from the stock market, and you can look around online for good tips.
Is derivatives a commodity capable of transfer?
Derivatives are by definition a financial instrument that is made by isolating and packaging some aspect of a commodity or a financial instrument. The simplest derivative is an "option". Assume that you own 100 shares of ABC Company stock. I believe that the price of ABC stock is going to go up over the next few months. So I pay you a small amount for the right to buy the ABC stock from you at a fixed price on a fixed date in the future. Say that ABC stock is presently valued a $10 a share but I believe it will go up substantially so I pay you $1 a share for the right to buy the stock from you for $15 a share next January 15th. Now your ABC stock is spilt into two things - the stock itself and the right to sell it after next January 15th (which you keep) and the right to buy the stock from you for $15 between now and January 15th (which is now mine). What if ABC stock goes up to $30 a share by January 15th. I would "exercise my option" - buy the stock from you for $15 then turn right around an sell it for $30 - making a $14 profit on each share (remember I paid $1 for the option to start with). But if the stock is worth $15 or less, I wouldn't exercise my option, I would let it lapse - once the option date has passed, the option would cease to exist. I can transfer my option at any time before it expires. So the derivative is a commodity capable of transfer.
