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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 price (strike price) before or at a certain time in the future (expiration date) for a consideration (premium).
Options are a derivative security. That is, the price of options fluctuated when the price of another security, moved.
There are four specifications uniquely describe any option contract:
1) The type (call or put),
2) Underlying stock name,
3) Expiration date and
4) Strike price
A stock options contract gives the owner the right to buy or sell a specified number of stocks (generally 100) of a company. The options holder can choose to exercise and convert the options to the company's stock when it is to their advantage.
A call option gives the holder the right, but not the obligation, to buy a fixed number of shares of a company at a specific price before the option's expiration date.
A put option gives the holder the right, but not the obligation, to sell a fixed number of shares of a company at a specific price before the option's expiration date
As an example, the term "ABC June 09 75 call" is an option to buy (a call) 100 shares of ABC stock (Underlying stock name) at $75 (Strike price) per share. The option expires in June 2009 (Expiration date). The price of a listed option (premium) is quoted on a per-share basis. Thus if the price of ABC June 75 call is quoted at $3, buying the option would cost $300 ($3 x 100 shares), excluding commission charge by brokers.
In short, options are just another form of investment that can be bought or sold just like a stock, a commodity or a bond.
What else can I help you with?
What is an option year in the nba?
Option year, two types: Player or Team. Player option: year that player has the option to continue with his contract and play that year for that team on the current contract. team option: team has the option to keep its current player with the current contract for that year.
Does at t wireless offer a no contract option for coverage?
ATT wireless does offer a no contract option for coverage. It is called "Go Phone". With this option you pay a monthly fee with no annual contract.
When do you receive option premium?
You receive option premium when you sell an option contract to another investor. The premium is the amount of money you receive upfront for taking on the obligation of the option contract.
Difference between put option and call option?
The holder/purchaser/owner of a call option contract has the right to buy an asset (or call the asset away) from a writer/seller of a call option contract at the pre-determined contract or strike price. The holder/purchaser/owner of a call option contract expects the price of the underlying asset to rise during the term or duration of the call contract, for as the value of the underlying asset increases so does the value of the call option contract. Conversely, the write/seller of a call option contract expects the price of the underlying asset to remain stable or to decline. The holder/purchaser/owner of a put option contract has the right to sell an asset (or put the asset) to a writer/seller of a put option contract at the pre-determined contract or strike price. The holder/purchaser/owner of a put option contract expects the price of the underlying asset to decline during the term or duration of the put contract, for as the value of the underlying asset declines the contract value increases. Conversely, the writer/seller of a put option contract expects the price of the underlying asset to remain stable or to rise.
What type of contract do both parties have the option to avoid their contractual obligations?
what type of contract do both parties have the option to avoid their contractual obligations what type of contract do both parties have the option to avoid their contractual obligations
When does the contract for LeBron James run out?
Lebron James contract runs out in late 2011. He does have the option to stay another year but that option is all up to him, and to him that option is "to-be-determined."
What is a player option in Major League Baseball?
'Player Option' is a term for a clause written into a player's contract that allows the player to extend the length of the contract for one year at a predetermined salary.If the player decides not to extend the contract, or 'pickup the option', the contract ends and the player becomes a free agent and can negotiate a new contract with any team.Just like a player option, contracts may also contain a 'team option'. This is a clause written into a contract similar to the player option except the team gets to decide whether they would like to extend the player's contract by one year for a predetermined salary.
Who can enforce an option contract?
An option contract can be enforced by the parties involved in the contract, typically the buyer and the seller. If there is a dispute, the parties may seek legal recourse through the court system to enforce the terms of the contract.
How many seasons does Derek Jeter have left on his contract?
Derek Jeter has two seasons left on his contract, with an option for a third. His contract was for three years (2011-2012) and an option in 2014.
Can an option contract be created without consideration?
No, in order to create a legally binding option contract, consideration is required. Consideration is what each party gives or promises to give in exchange for the other party's promise. It is a key element in forming a contract and provides the basis for a valid agreement.
What is the point of portemeirion options?
Portemeirion is famous for their pottery. An option is a contract to sell a specific product which is the underlying interest of that option. A Portemeirion option is a very specific contract with an option on Portemeirion pottery and has a very specific price and date when the contract can be exercised. For more information do a search for Options Trading and choose one.
Can an offeror revoke an option contract if the offeror decides that the consideration given is inadequate?
No, an offeror can't revoke an option contract if the offeror decides that the consideration given is inadequate. There would be an option to purchase the land.
