What is an option?
Financial options are a derivative financial instrument to whereby the buyer has the right (but not the obligation) to buy or sell an underlying asset (eg shares), at a fixed price in advance, on a specified maturity.
Features options
There are two types of financing options: Option
call (option) : The call options, give your buyer the right (but not the obligation ), to buy the underlying asset at an agreed price (exercise or strike price) on a date specified in the contract. On the contrary, the seller of the call option is always required sell the underlying asset, assuming that the option buyer exercises his right to buy the underlying asset.
For example, buying a call option, is usually performed when the investor provides that actions of a particular listed company, will have an upward trend. The option buyer pays a premium (to get the seller of the option), and reserves the right to buy the shares in the future, but at a price fixed today. If, however, those shares plummet, the buyer does not exercise its option to purchase, and have lost only the premium.
put option (put option) : The put options entitle the buyer, to sell the underlying asset (but not the obligation), at a price fixed in advance, and an agreed deadline. The seller of the put, assumes the obligation to sell, if the buyer exercises his right.
If an investor anticipates that the shares will fall, buy a put option, to guarantee an agreed price (higher than bearish expectations, of course), and in the case of opting for exercising their right , the seller of the put will be obligated to deliver the underlying at the agreed price.
In either case (call or put), the buyer of an option will always pay a premium, it will make him the right to exercise your choice.
Who does it?
Any business entity.
0 comments:
Post a Comment