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Which of the following is a true statement about the call option?
It is a way for investors to avoid paying a future higher price of a stock. NOVANET
Andrea wrote a three-month call on Echo stock The option cost 200 and the strike price was 10 What does the market price of Echo have to be for Andrea to break-even on this investment if the option is?
First, we have to assume this call was written against 100 shares of stock, because they usually are. Second, when Andrea wrote her call she received the $200 premium, or $2 per share. For Andrea to break even on this call, the market price of Echo stock has to be $2 per share above the strike price. SO...the answer is $12 per share.
What was Brooklyn union gas stock price in May of 1983?
You can call 800-482-3628 - Option 2 - Option 2 - they will then prompt you to enter a six (6) digit date for the day you would like the closing price for. Hope this helps!
What is the avergae price of the Caterpillar stock?
The average price of Caterpillar stock would depend on the time frame one is calculating the price of Caterpillar stock. As pf July 12, 2013 the price of Caterpillar stock was $87.17 US Dollars.
Why in short put the seller o a put option has the obligation to buy the underlying asset?
There are three kinds of these options, from the option seller's point of view: covered calls (you own the stock underlying, and you are giving the buyer the right, but not the obligation, to buy it from you at a certain price), naked calls (same thing but you don't have the stock), and puts (you are giving the put's buyer the right to sell you stock at a certain price; technically there are covered and naked puts but to the seller they're equivalent; the buyer has three days to deliver you the stock after you pay him for it, so it doesn't really matter whether he owned it before he entered into the put contract.)In all of these, the seller of the option warrants that he will do whatever it is the contract requires if the buyer exercises the option.
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 a stock option and how do you use it?
Stock options allow you to buy stock in a company at a certain price, no matter what the price of the stock is currently. There is usually a time period associated with the offer. Sometimes this could be a sweet deal (if the stock is currently higher than the option) to worthless (if the option price is higher that the current stock price). You also don't have to have the funds to exercise the option, you can have a brokerage company exercise the option, then sell the stock at the higher price, with the difference being your profit.
What can effect valuation stock options?
A valuation stock option is an agreement made to offer the option to purchase the stock at a later date. The price of the option is based on the reference price and the value of the asset in which the stock is being purchased.
What happen if spot price remains above spot price in call option in stock?
If the spot price of the stock exceeds the "strike price" in the call option, the option is in-the-money and you can exercise it. But if you have a choice, wait to exercise it until the stock's spot price exceeds the strike price enough to cover the premium. Example: the strike price is $40 and the premium was $2. In order to make money on this option, the stock price needs to be over $42--enough to pay for the stock and replace the money you spent buying the option.
How do option calls work?
Option calls give the holder the right to buy a specific stock at a predetermined price within a set time frame. If the stock price goes up, the holder can exercise the option to buy the stock at the lower price, making a profit. If the stock price stays the same or goes down, the holder can choose not to exercise the option, limiting their loss to the price paid for the option.
How an option holder gains from the volatility of the underlying stock price?
A component of the option price is the implied volatility of the stock. When the implied volatility rises the price of the option rises slightly. Read more about VEGA & DELTA of an option.
When should you exercise a put option?
You should exercise a put option when the stock price is below the strike price of the option, allowing you to sell the stock at a higher price than its current market value.
What is the strategy for using a put option short in the stock market?
The strategy for using a put option short in the stock market involves selling a put option contract with the expectation that the stock price will decrease. If the stock price falls below the strike price of the put option, the seller profits from the difference. This strategy is used to benefit from a bearish outlook on a stock.
What is the most effective option strategy for maximizing profits in the stock market?
The most effective option strategy for maximizing profits in the stock market is the long call option strategy. This strategy involves buying a call option on a stock with the expectation that the stock price will rise significantly. If the stock price increases, the call option will also increase in value, allowing the investor to profit from the price movement.
How to do calls and puts in options trading?
In options trading, a call option gives you the right to buy a stock at a certain price, while a put option gives you the right to sell a stock at a certain price. To do calls and puts, you would buy a call option if you think the stock price will go up, and buy a put option if you think the stock price will go down. You can also sell these options to profit from changes in the stock price without actually owning the stock.
How can I profit from a decrease in the price of a stock by selling to open a put option?
You can profit from a decrease in the price of a stock by selling to open a put option because you receive a premium upfront for agreeing to buy the stock at a specific price in the future. If the stock price decreases below the agreed-upon price, you can buy the stock at the lower market price and then sell it at the higher agreed-upon price, making a profit.
What is the difference between buying a call option and selling a put option?
Buying a call option gives you the right to buy a stock at a certain price, while selling a put option obligates you to buy a stock at a certain price.
