derivatives
2006-07-12 21:22:37 · 3 answers · asked by Anonymous in Business & Finance ➔ Investing
a call option is a when you buy the right but not the obligation to purchase the underlying security at a predetermined price(exersuce/strike price) at some point in the future
a put option is a when you buy the right but not the obligation to sell the underlying security at a predetermined price(exercise/strike price) at some point in the future
the upfront payment will be in the form of a option premium which you will have to pay to the writer/seller of the option
2006-07-12 21:44:46 · answer #1 · answered by ask me how 2 · 1⤊ 0⤋
A call option is a financial contract between two parties, the buyer and the seller of this type of option. Often it is simply labeled a "call". The buyer of the option has the right, but not the obligation to buy an agreed quantity of a particular commodity or financial instrument (the underlying instrument) from the seller of the option at a certain time (the expiration date) for a certain price (the strike price).
A put option (sometimes simply called a "put") is a financial contract between two parties, the buyer and the seller of the option. The put allows the buyer the right but not the obligation to sell a commodity or financial instrument (the underlying instrument) to the seller of the option at a certain time for a certain price (the strike price).
2006-07-13 06:53:50 · answer #2 · answered by PK LAMBA 6 · 0⤊ 0⤋
A call option is basically a bet on a specific stock that you think will go up. The same goes for a put option if you think that a specific stock will go down you buy a put option. The owner of the stock writes out the call option or put option. And sells it you for extra money. Hopes this helps.
2006-07-15 01:23:07 · answer #3 · answered by bookworm 5 · 0⤊ 0⤋