On those days there were 9,260 put options purchased on American Airlines while only 1144 call options.
On those same days, Morgan Stanley Dean Witter & Co which occupied 22 floors of the WTC saw an average of 719 put options per day purchased when they normally see an average of 27 per day.
“Put Options,” are contracts giving the buyer the option to sell stocks at a later date. Purchased at nominal prices of, for example, $1.00 per share, they are sold in blocks of 100 shares. If exercised, they give the holder the option of selling selected stocks at a future date at a price set when the contract is issued. Thus, for an investment of $10,000 it might be possible to tie up 10,000 shares of United or American Airlines at $100 per share, and the seller of the option is then obligated to buy them if the option is executed. If the stock has fallen to $50 when the contract matures, the holder of the option can purchase the shares for $50 and immediately sell them for $100.
2006-12-19
10:13:51
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