I know what options are and how they work for an invester. What I do not understand is why they are part of a company's portfolio. Because it is listed, it must be important information.
I also have found some companies without any options listed.
2007-01-12 15:43:29 · 3 answers · asked by Anonymous in Business & Finance ➔ Corporations
An option is the ability to buy or sell a stock at a certain price on a certain date. For example, you can have the guaranteed "option" to sell Yahoo for $30 a share any time from now until the end of July... IF you buy a "July 07 Put". Even if Yahoo is trading at $24 a share by the end of July, you have the guaranateed option to sell shares for $30 using your option. After the end of July, the option expires and is no good any more.
Click the "July 07" link on the options screen, then look in the puts section. At the $30 "stike" price, someone recently paid 0.85 (85 cents) *per share* for the option to sell shares of Yahoo (for $30) at any time from now until the end of July.
Moving that scenerio forward: If Yahoo goes down to $23 on the stock exchange, then in theory you could buy 100 shares for $23, then use your option to sell them at $30 for an instant $7 gain.
You don't need to own shares to buy those options, but lets say you have 100 shares of Yahoo and are afraid of a big drop by the end of July. You can buy a $30 July put (guranteed right to sell for $30 by the end of July). Lets say you pay $1 per share for the option. Now, for every dollar your stock loses, your option will gain a dollar. On the downside, you paid $1 per share. On the upside, you cannot lose any money on your shares of Yahoo stock because you have the guaranteed right to sell for $30 per share.
Calls are options for the option-holder to buy a stock at a certain price/date, while puts are options for the option-holder to sell a stock at a certain price/date. You can chose a wide variety of prices and dates to trade. You can see the various options available with the Yahoo options screen.
Where do these options come from? Well, lets say you have 100 shares of Yahoo stock that you are confident will go nowhere but up until the end of July. You could write someone an option to sell your 100 shares of Yahoo stock at a price of $30 by the end of July. They wouldn't want to sell for $30 unless the price they can buy it is a lot lower than that on the stock market. You might get a dollar per share for writing them the option to sell your shares. Even if it does go below $30 for a while before the end, chances are very slim it will actually be used by the person who bought it from you. What usually happens is that if the option expires when the stock price is above $30, you get to be happy you wrote it for $1 per share. If the option expires at a Yahoo stock price under $30, you'll be stuck paying the difference. So If Yahoo stock went down to $25 (unlikely but possible) you'd pony up $5 per share since the person you sold to has the option to sell for $30 and could buy it for $25 on the market if they had to.
If nobody is interested in writing any options for a stock, then none will be available on the options link.
It is EXTREMELY difficult to understand options because there are so many possible options available and so many ways they can play out. It took me a couple months of hardcore learning to learn and a year or so of trading before I completely realized what I was doing. And now since I havn't traded in so long I had to re-learn a lot before answering! I re-learned just by looking at the options screen. It came back to me after a minute or so. When I first learned about options it added a beautiful and great level of complexity to what you can do trading stocks, and I still love it!
2007-01-12 20:16:12 · answer #1 · answered by Citizen80285bnz 2 · 0⤊ 0⤋
is not important to a company. A compnay has no financial interest in the options set up that relate to the company. it is on yahoo fiunance because ti is important to an investor who has an interest in that particular firm.
2007-01-13 04:36:45 · answer #2 · answered by Anonymous · 0⤊ 0⤋
it truly is because of the differing nature of the methods in contact by showing the options themselves. All notwithstanding the share replace decision are purely a checkbox, they're going to seem as they were very last set. the share replace decision is displayed as a pull down menu. those are configured with one decision set because the default demonstrate decision, thus "do not share." it type of feels a marginally stupid decision on Yahoo!'s section. once you've chosen to share your updates then each and every time you're making any replace on your profile data or settings you've to reset the share Updates decision to share them back. right it is the HTML code for the judgements on that menu:
2016-10-30 23:29:56 · answer #3 · answered by bonanno 4 · 0⤊ 0⤋